Daytrading March 3 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

Stocks look set for a positive start ahead of this afternoon's Reserve Bank rate decision following a record close on Wall Street.

The March SPI 200 futures contract rose 14 points or more than 0.2% to 5954 as the S&P 500 and Dow Jones Industrial Average rallied to all-time closing highs and the Nasdaq ended above 5,000 for the first time in 15 years.

US stocks extended February's gains - the best month in three and a half years - as data from the US and Europe pointed to an improving global economy and investors reacted to China's weekend rate cut. The S&P 500 put on 13 points or 0.61%, with consumer discretionary companies leading the way following news of a pick-up in consumer spending. The Dow added 156 points or 0.86% and the Nasdaq 44 points or 0.9%, ending at 5,007 for the first time since March 2000, the month the dot-com bubble burst.

“With February as strong as it was, to see some follow-through here is encouraging,” Walter Todd, chief investment officer at Greenwood Capital in the US, told Bloomberg. “We got some decent data this morning and with numbers out of Europe better than expected and the Chinese central bank cutting rates over the weekend, it’s a combination of those things that have us moving higher.”

Investors took a 'glass-half-full' view of mixed US data. Consumer spending adjusted for inflation increased 0.3% last month and after-tax income jumped 0.9%, the strongest increase in three years. However, construction spending unexpectedly declined 1.1% and manufacturing activity slowed this month in line with expectations.

European stocks surrendered early gains, retreating from a seven-year high despite news that consumer prices declined less than expected last month and a slow expansion in manufacturing activity continued. The Stoxx Europe 600 lost 0.23% as Germany's DAX inched 0.07% higher, France's CAC fell 0.7% and Britain's FTSE retreated 0.08%.

Energy stocks were a drag in both Europe and the US as Brent crude fell heavily, stifling a rally in West Texas Intermediate with it. The US energy sector lost 0.7% after WTI for April delivery settled 17 cents or 0.3% lower at US$49.59 a barrel. WTI earlier ran as high as US$51.04 before succumbing to gravity as Brent crude tumbled 4.9% or $3.04 to US$59.54.

BHP and Rio Tinto fell back from three-month highs in the US as iron ore declined for the third time in four sessions.  BHP dropped 0.4% and Rio Tinto 1.74% in US trade. Spot iron ore for import to China yesterday eased 20 cents to US$62.80 a dry tonne.

Gold stocks retreated for a second session in the US as the metal marked its first loss in four sessions. The NYSE Arca Gold Bugs index slumped 2.62%. Gold for April delivery settled $4.90 or 0.4% lower at US$1,208.20 an ounce.

Copper briefly touched a seven-week high in London before paring gains amid speculation about the health of the Chinese economy following Saturday's rate cut. London copper held on to a final gain of 0.2% and lead 1.2%. Aluminium fell 0.8%, nickel 1.6%, tin 0.8% and zinc 0.3%. US copper for March delivery was recently off 0.3% or two-thirds of a cent at US$2.71 a pound.

The dollar was this morning buying 77.68 US cents.

TRADING THEMES TODAY

RATES ANTICIPATION: Today's session takes place under the long shadow of a Reserve Bank rate decision. The market is pricing in a 58% likelihood that the RBA will announced a second straight cut to the cash rate at 2.30pm EST this afternoon, bringing it down 25 basis points to a record low 2% from 2.25%, according to NAB. As always, the question for traders is the extent to which a cut is priced into the market. This time last month I suggested the market had pre-empted most of the upside from a cut following a 300-point surge in less than two weeks - the index has since put on another 330 index points, so I'll refrain from any predictions today...! Suffice to say, that a cut would bring the 6,000 level into play for the XJO.

ECONOMIC NEWS: Monthly building approvals and current account figures are due at 11.30am EST, but they are distractions compared to the result of today's RBA policy meeting announced at 2.30pm. A low-key session tonight in the US offers vehicle sales and an economic optimism survey.

Good luck to all.