daytrading march 5 pre-market

Morning traders.

Market wrap:

Falls in resource stocks and key commodity prices in overseas action on Friday point to a soft start to Australian trade this morning.

The March SPI 200 futures contract ended 16 points or nearly 0.4% weaker at 4262 on Saturday morning as European stocks ended mixed and US stocks tallied mild losses on low volumes.

With little in the way of market-moving news, US stocks drifted lower amid speculation that this year's recovery has outpaced the global economic outlook. A 0.33% fall in the S&P 500 on Friday was not enough to stop the index's eighth weekly gain from the last nine weeks. The Dow lost three points or 0.02% on the day and 0.04% for the week. The Russell 2000 Index of small caps fell 1.3% on Friday.

"Some people may think that the market is a bit ahead of itself after the rally in stocks," a money manager at Pioneer Investments in the US told Bloomberg. "There's concern about a potential slowdown as a result of Europe's debt crisis. People seem to have been more relaxed about the situation in Europe, but when you look closely you see that the underlying issues remain unresolved."

Energy stocks and other cyclical sectors fell hardest in the US as a rising greenback pressured commodity prices. The Dow Jones Transportation Average, sometimes used as a proxy for the US economy, fell 1%. Rio Tinto eased 0.32%, BHP 0.1% and Alumina 0.26%.

Crude oil gave back most of Thursday's gains after Saudi Arabia denied an Iranian report that one of its pipelines had been attacked. US light sweet crude for April delivery fell $2.34 or 2.15% to US$106.50 a barrel for its first weekly loss in a month.

The decline in oil came as analysts at HSBC described its rise as the key threat to the global economy. "Oil is the new Greece," they wrote in a note quoted on MarketWatch. "If the trend persists, a fragile economic recovery in the developed world could quickly be derailed and inflation could return to emerging markets."

Precious metals fell back in Friday's general retreat from risk assets as the US dollar found favour. Gold for April delivery lost $9.80 or 0.6% at US$1,712.40 an ounce. May silver declined 88 cents or 2.5% to US$34.78 an ounce.

An increase in Shanghai warehouse copper stocks to their highest level in a decade pushed the price of copper lower but other metals edged higher. In London, copper fell 0.6% and aluminium lost 1.3%. Lead added 1.25%, nickel 0.5%, tin 0.6% and zinc 0.6%. US copper dropped 0.6%.

"Growing inventories in Shanghai have probably something to do with the Chinese New Year holiday but this still shows that China imported more material than it actually needed in the last few months and this might lead to lower imports in the next few month," a Commerzbank analyst told Reuters.

European markets ended mixed as Spain raised its deficit target far above the level previously agreed with the European Union for this year. The news raised concerns over the willingness and ability of other European governments to meet deficit targets seen as crucial to bringing the region's debt crisis under control. Britain's FTSE gave up 0.34% and Germany's DAX eased 0.29% but France's CAC rallied 0.04%.

TRADING THEMES THIS WEEK

DOMESTIC ECONOMY UNDER THE SPOTLIGHT: Long-term traders know Australian shares seem more responsive to news from China and the US than domestic economic reports, however, a heavy slew of Australian data this week should ensure local concerns have some impact. Likely highlights from the full schedule of reports listed below include tomorrow afternoon's interest rate decision, Wednesday's GDP figures, Thursday's employment data and Friday's trade update.

CHINESE INFLATION: With the fortunes of Australia's mining sector so closely tied to Chinese demand, there is considerable interest in the prospects of further monetary easing in our biggest trading partner. That in turn is partly dependent on continuing declines in inflation. Friday brings the latest figures for consumer and producer inflation, with both expected to have eased last month. January's uptick in consumer inflation showed there is the possibility of a negative surprise.

US JOBS RECOVERY: With the earnings reporting season nearing its end and European issues pushed to the backburner, the main focus in the US this week is likely to be Friday's employment report. With weekly jobless claims in sharp decline there is growing optimism that the slow economic recovery is gathering pace. Economists surveyed by MarketWatch predict the economy gained 208,000 jobs last month to leave the unemployment rate steady at 8.3%.

ECONOMIC NEWS: A busy week of domestic news includes: the services index at 9.30am EST, inflation gauge at 10.30am, job ads and company operating profits at 10.30am (all today); current account, cash rate and rate statement (tomorrow); GDP and construction index (Wed); employment change and unemployment rate (Thu); and trade balance (Fri). Highlights in the US include: ISM services, factory orders and productivity (tonight); unit labour costs (Wed); weekly jobless claims (Thu); and non-farm payrolls, unemployment rate and trade deficit (Fri).

Good luck to all.