Daytrading July 7 pre-market

Morning traders. Thanks Trees.

Market wrap:
Shares face a subdued start after declines on European markets pushed US futures into the red during Friday's Wall Street holiday.

The September SPI 200 futures contract rallied 13 points or more than 0.2% to 5495 but volumes were extremely low and trade ceased at midnight on Friday before a late slide saw most European markets close at their session lows.

The benchmark index in Europe ended its best week since March with a fall of 0.28% after Austrian market heavyweight Erste Group Bank released a profit warning. The Stoxx Europe 600 had risen 2.1% through to Friday, pushing equity valuations to their highest level since 2009. Sixteen out of eighteen European markets fell on Friday, including falls of 0.2% on Germany's DAX, 0.47% on France's CAC and 1.49% on Italy's FTSE MIB. Britain's FTSE edged up 0.01%.

European markets saw strong gains for most of last week following unexpectedly robust US jobs figures for June and after the European Central Bank hinted that further stimulus measures were possible if the euro-zone economy does not respond to the bank's latest efforts to increase inflation.The valuation of the Stoxx 600 rose to 15.7 times the estimated earnings of its members, the highest level since 2009.

With regular trade on Wall Street suspended for the Independence Day long weekend, Emini Dow futures drifted five points or less than 0.1% into the red.

Australia's largest miners closed mixed in UK trade as spot iron ore held recent gains. BHP rallied 0.55% and Rio Tinto fell 0.32% as spot iron ore for import to China closed unchanged at US$96.50 a dry tonne.

Oil wrapped up its longest losing streak in five years with a seventh straight decline on Friday as traders continued to discount the risk of supply breakdowns from Iraq and Libya. West Texas Intermediate crude oil for August delivery fell 29 cents or 0.3% to US$103.77 a barrel in electronic trading as the Libyan government announced it will resume exports from two ports previously closed by rebel forces.

“The thing which pushed oil really down was Libya saying it will reopen the two terminals,” Hans van Cleef, energy economist at ABN Amro Bank, told Bloomberg. “We’ll have to wait and see what actually happens, but for the moment it gives some relief. In Iraq we expect exports and production will probably remain untouched.”  

Copper pared gains from its best week in nine months with a fall during a broadly negative session on the London Metal Exchange on Friday. Copper dropped 0.35% on the day but gained 3% for the week. Nickel fell 2.37%, aluminium 0.67%, lead 0.68% and tin 0.55%. Zinc closed unchanged.

Gold inched higher in electronic trade in the US. Gold for August delivery rose $1.90 or 0.1% to settle at US$1,322.50 an ounce and ended the session at US$1,321.30.

The dollar opened with a small gain this morning, lately buying 93.69 US cents, up from 93.53 cents on Friday.

TRADING THEMES THIS WEEK

SLOW START?: The Australian trading week is likely to begin on a subdued note following a US holiday on Friday and mild declines in Europe. That +13 SPI number can pretty much be discounted because the market closed before trading in Europe ended and participation was low. However, there was little to worry about in Friday's overseas action - just standard profit taking at the end of a very strong week - so there is unlikely to be significant downward pressure here.

NEW US EARNINGS SEASON: Wall Street has a chance to gauge record stock levels against earnings as the Q2 profit season gets underway at the end of this week. The first cabs off the rank are former Dow component Alcoa on Thursday and banking heavyweight Wells Fargo on Friday. While the first few reports tend to have a psychological impact on the market beyond their index weighting, the meaty stuff comes next week with reports from the likes of Goldman Sachs, Google, JP Morgan and Intel. Investors were in a forgiving mood last reporting season, marking weak earnings down to unusually severe winter weather; they may not be as tolerant this time around.

CHINESE RECOVERY: More opportunities this week to measure the scale of the rebound in the Chinese economy. Wednesday brings monthly inflation data and Thursday trade, new loan and money supply figures.

ECONOMIC NEWS: The monthly jobs report on Thursday is this week's Australian highlight. The full menu for the week looks like this: AIG Construction Index 9.30am EST and job ads at 11.30am (both today); consumer confidence (Tue); consumer sentiment (Wed); employment change, unemployment rate, inflation expectations (Thu); and home loans (Fri). The highlights of a low-key week in the US are: the minutes from the June Federal Reserve meeting (Wed); and weekly jobless claims (Thu).

Good luck to all.