daytrading may 11 pre-market

Morning traders.

Market wrap:

Stocks face a mildly negative start after a rally in the US fizzled in the last hour despite a drop in jobless claims and signs of compromise in Greece's political deadlock.

The June SPI 200 futures contract, which was initially pointing higher this morning, ended the night session six points or 0.1% weaker at 4295 after shares in JP Morgan plunged more than 5% in after-market trade as the company announced a US$2 billion loss in "synthetic credit" positions.

Earlier, the Dow broke its longest losing streak in nine months but held on to just 20 points or 0.16% of an initial 100+ point rally. The S&P 500 put on 0.25%, led by financial shares as European worries temporarily eased, and the Nasdaq fell 0.04% after a disappointing earnings report from tech heavyweight Cisco.

Concerns about the stuttering US jobs recovery were soothed by a reduction in weekly first-time claims for unemployment benefits. The four-week average declined 5,250 to 379,000 after a 1,000 decrease to 367,000 last week.

"We finally got some good news today," the chief market strategist at JP Morgan Funds told
European markets rallied as Greece moved towards a political compromise that would keep the country in the euro and Spain's part-nationalisation of its fourth-largest bank relieved pressure on its bond and equity markets. The socialist leader in Greece pledged to form a government that keeps the nation in the euro-zone and said he had made progress towards a coalition with the centre-right New Democracy and minor Democratic Left party.

Spain's 10-year bond yield dropped back below the critical 6% level after the government took a 45% stake in the troubled Bankia. The country's benchmark equity index, the IBEX 35, rebounded 3.42% from Wednesday's nine-year low. Elsewhere, Germany's DAX rallied 0.66%, France's CAC 0.37% and Britain's FTSE 0.25%.

A flat session for the US dollar took some of the pressure off commodities, but most struggled to hold on to much of their gains. Oil was little changed despite yesterday's disappointing Chinese trade figures and a report that OPEC increased production last month. West Texas crude for June delivery was recently down nine cents or 0.1% at US$96.70 a barrel after running as high as US$97.69.

Gold couldn't sustain a push back above US$1,600. Gold for June delivery was recently down 70 cents or less than 0.1% at US$1,593.50 an ounce.

Copper broke a five-session losing run, recovering from a three-week low as declines in London and Shanghai inventories offset weak export data from China. In London, copper rallied 0.8%, lead 0.9% and zinc 0.8%. Aluminium dropped 0.4%, nickel 0.1% and tin 1.1%. US copper for July delivery was recently up two cents or 0.7% at $3.68 a pound.

"The [US] data today has put a small bid under risk assets, but the bigger surprise is how well the markets really shrugged off the Chinese exports numbers," a manager at Pacific Investment Management in the US told Reuters. "We've had quite a sell-off over the past few days. Maybe it has just run its course, and there's buyers below here."

TRADING THEMES TODAY

SIGNS OF STABILITY: Not a knock-out night on overseas markets but some welcome signs that this week-long freefall has been arrested. Equities in the US and Europe squeezed out modest rises and oil and metals steadied. If we can get through the next 24 hours without significant damage, next week could bring a rebound. Of course, much will depend on events in Greece. Unfortunately, our futures have turned negative in the last hour after JP Morgan announced a whopping loss on "synthetic credit" positions. That may have undermined the outlook for the day. A double dose of Chinese data today adds to the uncertainty. Stay nimble.

CHINESE DATA PART 2: Yesterday's soft Chinese trade data resurrected fears of a slowdown in our major trading partner and fuelled a temporary dip on the ASX. Today brings two rounds of figures that should clarify those concerns. Inflation statistics are due at 11.30am EST. These matter because benign inflation will allow the central bank to stimulate the economy, theoretically increasing demand for Australian raw resources. The expectation today is for a fall in consumer inflation from 3.6% to 3.4% this month. A second round of figures at 3.30pm includes retail sales, industrial production and fixed asset investment.

ECONOMIC NEWS: There are no major scheduled domestic releases today but plenty of interest in Chinese inflation figures at 11.30am EST and retail sales, industrial production and fixed asset investment at 3.30pm. Highlights tonight in the US include the producer price index and core PPI, consumer sentiment and inflation expectations.

Good luck to all.