Daytrading October 1 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

Shares face a flat start as the prospect of dour Chinese economic data caps buyer enthusiasm after Wall Street closed out its worst quarter in four years with its best session in three weeks.

The December SPI200 futures contract ended the night session unchanged at 5007 amid caution following yesterday's pre-emptive ASX rally and low expectations for Chinese manufacturing reports due this morning. The ASX 200 rallied 103 points or 2.1% yesterday during a typical end-of-quarter 'window dressing' session.

Window dressing and short covering were dominant themes in the US overnight as US stocks rebounded from five-week lows. The S&P 500 rallied 36 points or 1.91% to reduce its second straight quarterly decline to 6.9%. The Dow clawed back 236 points or 1.47% but extended its losing streak to a third quarter for the first time since 2009. The Nasdaq led the rally with a gain of 103 points or 2.28% as beaten-up biotechs recovered from two weeks of heavy selling.

"I think there's a lot of short covering going on," Marc Chaikin, CEO of Chaikin Analytics in the US, told CNBC. "A lot of people looking at [Tuesday's] dip as a successful retest of the lows. We have to see how the market closes out this week and the first trading week of October."

Buying accelerated into the close, pushing the major indices to session highs on the final day of the quarter. The iShares Nasdaq Biotechnology ETF, which has been under political pressure after a pricing scandal, bounced 4.78%. The Russell 2000 index of small caps, which on Tuesday settled at an 11-month low, regained 1.55%.

“We’re getting a snap-back in some of the beaten down names,” Lew Piantedosi, vice-president of growth equities at Eaton Vance Management in the US, told Bloomberg. “There also could be some end-of-the-quarter window dressing going on today.”

Market sentiment was boosted by solid US economic data, which bolstered the case for a rate hike, and weak Japanese and European data, interpreted by some as supporting the need for more stimulus. Private employers hired 200,000 new employees in the US last month, an improvement on the 186,000 hires in August and ahead of expectations for a gain of 192,000.

The Nikkei jumped 2.7% yesterday after a surprise 0.5% decline in industrial output highlighted the government's struggle to get the economy firing. Prime Minister Shinzo Abe vowed overnight to do more to combat deflation. Read more here.

European markets surged after a decline in consumer prices for the first time in six months raised hopes of more stimulatory policy from the European Central Bank. The Stoxx Europe 600 charged 2.52%, Germany's DAX 2.22%, France's CAC 2.57% and Britain's FTSE 2.58%.

A second night of strong recovery in battered UK-listed commodities trader Glencore helped BHP and Rio Tinto extend their rebounds in US trade. Glencore rallied 14.08% overnight. BHP put on 2.9% and Rio Tinto 3.58%. Spot iron ore for import to China yesterday eased 30 cents to US$54.40 a dry ton ahead of a week-long Chinese holiday.

US oil stocks rose 2.36% as crude wrapped up a losing quarter with a modest retreat. West Texas Intermediate crude oil for November delivery settled 14 cents or 0.3% lower at US$45.09 a barrel to extend its quarterly loss to 24%.

Gold stocks rebounded despite a fourth straight loss in the metal. The NYSE Arca Gold Bugs index added 3.05%. Gold for December delivery settled $11.60 or 1% weaker at US$1,115.20 an ounce. The metal gave up 1.5% last month and 4.8% over the quarter.

A short-covering rally sent copper up almost 4% ahead of the week-long Chinese public holiday that starts today. Read more here. London copper spiked 3.8%, aluminium 0.8%, lead 0.9%, nickel 5.3% and zinc 2%. Tin fell 0.5%. US copper for December delivery was recently up % at US$2.42 a pound.

The dollar was this morning buying 70.15 US cents.

TRADING THEMES TODAY

WINDOW DRESSING UNWINDS, CHINA ON TAP: The last day of the month proved a winner on global markets as institutional traders desperately slapped lipstick on a pig of a quarter. The ASX pre-empted the rally yesterday and therefore looks like starting the session somewhere near neutral. Some of the window dressing may unwind early in the session. After that, we have the grim prospect of September Chinese factory reports to set the tone. The official manufacturing PMI at 11am EST is expected to hold steady at 49.7, according to Forex Factory. The final version of Caixin's rival gauge 45 minutes later is tipped to improve a fraction to 47.2 from an initial reading of 47. A measure of Chinese consumer confidence showed unexpected strength yesterday, so a surprise today is possible and would give the ASX a welcome boost.

ECONOMIC NEWS: The AIG Manufacturing Index is due at 9.30am EST, but the big interest here this morning is twin Chinese factory reports: the 'official' September manufacturing PMI at 11am and the final version of Caixin's private measure at 11.45am. Both releases also include services PMIs that carry less weight with traders. Among the highlights tonight in the US are weekly jobless claims, rival manufacturing PMIs, manufacturing prices, construction spending, Challenger Job Cuts, vehicle sales and a speech by a Fed official.

Good luck to all.