Daytrading November 9 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

Weak Chinese trade data, declines in commodities and one-month lows in BHP and Rio Tinto point to a soft start to Australian trade despite a mixed finish on Wall Street on Friday.

The December SPI200 futures contract sank 28 points or 0.5% to 5194 as market heavyweight BHP tanked 5.2% on heavy volume and the dollar plunged more than a cent. Soft Chinese trade figures released over the weekend may add to the headwinds.

US stocks pared early losses to end the session mixed after strong October jobs data raised the odds that the Federal Reserve will increase its target rate next month. The S&P 500 fell as much as 16 points before paring its loss to 0.03% or less than a point. The benchmark index gained 1% last week to extend its run of weekly advances to six, the longest of the year. The Dow improved 47 points or 0.26% on Friday for a weekly rise of 1.4%. The Nasdaq added 19 points or 0.38% on the day for a five-day rise of 1.9%.

"While higher interest rates themselves are not a good thing, a vote of confidence in the strength of the economy I think is going to overshadow that over time," Peter Jankovskis, co-chief investment officer at OakBrook Investments in the US, told Reuters.


Rate-sensitive equities slumped and the US dollar surged, depressing commodity prices, after data showed last month delivered the biggest improvement in employment of the year. The economy added 271,000 jobs in October, almost twice the September gain and well ahead of expectations for a rise of 181,000. The unemployment rate declined to 5% from 5.1%. Hourly wages increased by 0.4% for the best 12-month-gain in six years.

The odds that the Fed will lift its target rate next month increased beyond 70% from 58% shortly before the jobs report, according to Bloomberg. The US dollar index charged 1.19% to its highest level since April, pushing the Australian dollar down 1.2 cents or 1.7% to 70.2 US cents.

"This number sends a clear message that whatever slowdown in [US] hiring we saw in August and September has been very decisively reversed," Omer Esiner, chief market analyst at currency brokerage Commonwealth Foreign Exchange in the US, told Fairfax. "This certainly bodes well for the [US] dollar."

The rate-sensitive utilities sector was the biggest drag on the S&P 500, tumbling 3.6%. Consumer staples fell 1.4%. Resource stocks also came under pressure as the rampant greenback raised dollar-denominated commodity prices for holders of other currencies.

Commodity prices face another headwind after weekend data showed Chinese trade sagged for an eighth straight month in October. Exports declined 6.9% from a year earlier and imports were down 18.8%. The trade surplus of US$61.64 billion was a record. The dire figures place more pressure on the central government to stimulate the economy. Read more here.

BHP was hammered 5.21% on more than twice its usual US volume following news of a disaster at a joint-owned Brazilian mine. Rio Tinto shed 0.63%. Spot iron ore for import to China declined 30 cents to US$47.40 a dry ton.

An index of US gold stocks slumped to a five-week low as gold's losing run entered a seventh session. The NYSE Arca Gold Bugs index gave up 4.19%. Gold for December delivery settled US$16.50 or 1.5% lower at US$1,087.70 an ounce, the lowest settlement since August 5. The metal shed roughly 4.7% last week.

The US energy ETF declined 0.51% as oil extended its loss for the week to 5%. West Texas Intermediate crude oil for December delivery settled at US$44.29 a barrel, off 91 cents, or 2%.

US-traded copper for December delivery fell 0.5% to US$2.24 a pound, its lowest level since August. London copper also shed 0.5%, nickel 1.6%, tin 0.1%. Zinc closed flat. Lead edged up 0.1% and aluminium 1%.

European stocks secured gains in volatile trade as the euro hit a six-month low. The Stoxx Europe 600 put on 0.31%, Germany's DAX 0.92% and France's CAC 0.08%. Britain's FTSE lost 0.17% under pressure from miners.

TRADING THEMES TODAY

UP-HILL AND INTO THE WIND: The headline figures from Wall Street on Friday show little change, but there was a lot happening under the hood. Unfortunately, much of it was negative for Australia - the dollar was walloped, which arguably makes a rate cut less likely by doing the RBA's job for it; commodity prices slumped; BHP copped a real hiding; and China released another round of disappointing trade news. The latter could well get the 'bad economic news is good news' treatment on the basis that it increases the likelihood of more monetary stimulus. Otherwise it's hard to see many positives. Perhaps the fact US small caps outperformed? Mind you, can't say I've noted any strong correlation between the Russell 2000 and Australia's Small Ords.   

ECONOMIC NEWS: October job advertising is due at 11.30am EST. There are no major US reports listed for tonight.

Good luck to all.