daytrading may 16 pre-market

Morning traders.

Market wrap:

Stimulus hopes helped push US stocks to fresh record highs overnight but any Australian gains will be capped by declines in metals and mining stocks.

The June SPI 200 futures contract limped two points or less than 0.1% higher to 5203 amid caution over yesterday's sharp ASX pull-back and overnight falls in iron ore, gold, base metals and Australia's big two miners.

US stocks secured record closes as traders bet that a round of weak economic data from the US and Europe pointed to continued central bank support. The S&P 500 rallied nine points or 0.52% to 1,659, its ninth record close in ten sessions. The Dow put on 60 points or 0.41% and the Nasdaq trailled at +0.27%.

The gains followed a string of data disappointments. Industrial production in the US suffered its biggest decline in eight months during April. Manufacturing in the greater New York region unexpectedly fell this month. Wholesale prices in the US posted their largest drop in three years. Euro-zone GDP shrank 0.2%, leaving the region stuck in recession as France, Spain and Italy contracted and the German economy grew at an anaemic 0.1%. A rebound in confidence among US house builders was a rare bright spot.

"The global economic outlook gives some support to the idea that more easing is on its way, especially with soft inflation," the president of Gary Goldberg Financial Services in the US told Bloomberg. "It would be surprising if there was a meaningful and prolonged pullback at this point."

Consumer staples was the best-performing sector on the S&P 500, but risk appetite was solid. The Dow Jones Transportation Index advanced 0.84% and the Morgan Stanley Cyclical Index gained 0.35%.

BHP lost 1.71% and Rio Tinto 2.1% as the price of iron ore fell to its lowest level since mid-December. Spot iron ore in Shanghai eased US$1.70 or 1.3% to US$126.40 per dry metric tonne.

Energy was the worst of the 10 S&P industry groups as oil hit an intraday low at US$92.13 before a late rebound. West Texas Intermediate crude for June delivery was lately up 19 cents or 0.2% at US$94.39 after ending a run of four straight losses.

An index of US precious metals miners slumped 4% as gold tumbled back below US$1,400 an ounce and silver fell to its lowest level in a month. Gold for June delivery was lately down $33.50 or 2.35% at US$1,391 an ounce. July silver dropped 83 cents or 3.6% to US$22.55 an ounce.

"Gold is directly confronting the probability that the US dollar will ascend higher, taking a variety of forex signals back to days not seen since at least 2006," a macro strategist at Global Hunter Securities in the US told MarketWatch. "This has very large implications for many things, and gold is very exposed here."

Industrial metals were pressured by a rising greenback, rising inventories and Europe's bleak economic outlook. US copper for July delivery was recently off 0.3% or one cent at US$3.28 a pound. In late trade in London, copper was down 1.7%, aluminium 1.2%, lead 1.2%, nickel 1.5%, tin 1.3% and zinc 1.15%.

European markets advanced for a sixth session in seven as traders bet that the grim GDP figures will force the European Central Bank to do more to boost the economy. Germany's DAX put on 0.27%, France's CAC 0.4% and Britain's FTSE 0.12%.

TRADING THEMES TODAY

TWO-SPEED MARKET: The ASX has become increasingly unpredictable over the last two months as it juggles conflicting currency influences. A falling dollar is broadly positive for the economy and therefore the stock market, but the flipside is a rising US dollar that undercuts dollar-denominated commodities and impacts the miners who make up so much of the Australian market. It's a conundrum. The greenback continued its ascent overnight to grim effect on precious metals especially and base metals and iron ore secondly. Oil rebounded sharply and copper was lately off its lows, however, the overall result will likely be another downleg for most mining stocks. Banks were strong in the US and likely will have to advance here if we are to avoid another tumble. The after-effects of the Federal Budget and UGL profit downgrade may continue to rumble through the market.

ECONOMIC NEWS: No significant domestic news scheduled today. Japan releases GDP and industrial production figures. Europe has trade and inflation reports scheduled tonight. A busy night ahead in the US includes weekly jobless claims, building permits, consumer price index/core CPI, housing starts, Philly Fed Manufacturing Index and natural gas storage.

Good luck to all.