daytrading may 31 pre-market

Morning traders.

Market wrap:

Shares are likely to open higher after most commodities improved overnight and US traders bet that weak economic data will keep Federal Reserve stimulus pumping.

The June SPI 200 futures contract rallied 19 points or 0.4% to 4961 as US stocks rebounded from their worst session in four weeks, gold broke above US$1,400 an ounce and the decline in iron ore continued.

A final-hour fade stripped the S&P 500 of much of its advance for the night, with the index closing six points or 0.34% ahead after being up as much as 14 points. The Dow held on for a gain of 22 points or 0.15% and the Nasdaq added 0.68%. The rally came on the back of a generally disappointing swag of economic news as GDP, jobless claims and housing data all came in weaker than expected.

The rate of economic growth was revised down to 2.4% from an initial assessment of 2.5% following cuts to government spending and tax increases. First-time claims for unemployment benefits increased by 10,000 last week to 354,000 and the previous week's reading was revised upwards by 4,000 to 344,000. The number of pending house sales improved 0.3% last month to a three-year high, also just below economists' expectations.

"The take away from today's statistics is that there's going to continue to be a bias to keep QE [quantitative easing] in place," a fund manager at Federated Investors in the US told Bloomberg. "As long as that perception exists, it'll be positive for financial assets."

The gains came despite another plunge in Japan yesterday, where the Nikkei sagged 5.15% to bring its total loss in the last week to 14.7%. The index had appreciated 65% in 12 months.

European markets shook off Wednesday's malaise after a gauge of economic confidence showed improvements in the continent's five largest mainland countries - Germany, France, Italy, Spain and the Netherlands. Germany's DAX rallied 0.76%, France's CAC 0.55% and Britain's FTSE 0.45%.

Iron ore fell to a new seven-month low yesterday, but the pace of the decline eased. Spot iron ore in China dropped $1.30 or 1.1% to US$111.60 per dry metric tonne, following a 4.2% drop the previous session. Despite the falls, BHP and Rio Tinto broke to their highest level in a week in US trade, rising 1.75% and 2.72%, respectively.

Other commodity action was brighter as the US dollar came under pressure from a revived euro following the upbeat European economic confidence report and the US data misses. Gold settled at a two-week high after breaking through the US$1,400 an ounce level that had stubbornly resisted several previous rallies. Gold for August delivery was lately up $21.60 or 1.6% at US$1,413.40 an ounce. July silver rallied 26 cents or 1.1% to US$22.71 an ounce.

"The greenback fell sharply after the first quarter GDP, unemployment claims and pending home sales all disappointed expectations," a technical analyst at GFT Markets in the US wrote in a note quoted on MarketWatch. "This helped to boost the appeal of gold and silver, which continue to attract solid demand in the physical market."

Most industrial metals improved, with copper benefitting from a report showing falling annual output from leading producer Chile after a series of strikes and other production issues. US copper for July delivery was recently up 0.5% or nearly two cents at US$3.32 a pound. In London, copper advanced 1%, aluminium 2.5%, lead 2.1%, tin 0.2% and zinc 1.5%. Nickel eased 0.1%.

Oil overcame some wobbles to pare Wednesday's fall despite a rise in US inventories to an all-time high. The US Energy Department said crude supplies increased by three million barrels last week to 397.6 million barrels, the highest level since the authority began collecting data in 1978. West Texas Intermediate crude oil for July delivery was recently up 44 cents or 0.5% to US$93.57 a barrel.

"The elements are in place to cause a significant pullback in prices," the Kilduff Report noted in a report quoted on MarketWatch. "If... slowing in China becomes apparent... that will likely be the tipping point for a dive in prices."

TRADING THEMES TODAY

BOUNCING ALONG THE BOTTOM: The market should open a little higher this morning following overnight gains in US stocks, BHP, Rio and most resources. US traders were in a "glass half full" mood, interpreting soft economic data as supportive for equities because a weak economy will delay the inevitable moment when the Fed starts to wind down its stimulus effort. There was good news for goldbugs and hope for iron ore miners, with the rate of decline in the price of iron ore slowing. The XJO yesterday hit a critical level for the short-term outlook and needs to kick higher from here or it's likely to go quite a bit lower. If we're lucky we'll see a nice last-day-of-the-month pump from domestic institutional traders looking to improve their monthly reports, but they may not have the firepower as overseas money continues to exit the Australian market as the dollar loses ground.

ECONOMIC NEWS: Monthly private sector credit figures are due at 11.30am EST. Japan is due to release a swag of data before our market opens, including manufacturing, household spending, inflation, industrial production and unemployment figures. OPEC meets tonight. Europe releases unemployment and inflation data. Highlights in the US tonight include: personal spending and income, core price index, revised consumer sentiment and inflation expectations and Chicago PMI. China is due to release manufacturing figures tomorrow.

Good luck to all.