Daytrading October 12 pre-market

Morning traders. Thanks Trees and weekend regulars.

Market wrap:

Australian shares look set to start the week modestly lower after Wall Street's best week of the year ended with slim gains on Friday as a rally in resource stocks fizzled.

The December SPI200 futures contract eased 18 points or 0.3% to 5249 at the end of the share market's strongest weekly rally in almost four years. The ASX 200 put on 228 points during last week's five-session winning run, its best return since December 2011.

US stocks edged to a positive close on Friday as gains in technology, industrials and health offset weakness in energy and materials. The S&P 500 gained more than a point or 0.07% during a 'consolidation' session at the end of the index's best week of 2015. The Dow added 34 points or 0.2% and the Nasdaq 20 points or 0.41%.

"It's a quiet end to a fairly busy week, particularly in monetary policy. Fed speeches are keeping markets in limbo," Ryan Sweet, director of real-time economics at Moody's Analytics, told CNBC. "You have a lot of mixed messages on the future of monetary policy from the Fed."

The minutes from the September Federal Reserve policy meeting released on Thursday suggested the central bank may be further away from raising rates than market odds indicated. Friday's round of Fed speeches and interviews did little to lift the confusion, with Atlanta Fed President Dennis Lockhart arguing that rates could rise as early as this month, while New York Fed President William Dudley said a slowing global economy had muddied the outlook, and Chicago Fed President Charles Evans argued for a delay until next year.

A rally in raw-materials stocks ran out of steam after Alcoa got a new quarterly earnings season off to a downbeat start. Shares in the aluminium producer sagged 6.81% after it downgraded its production outlook for China. Read more here. Australia's largest miners resisted the downdraft, with BHP rising for a ninth straight session in the US. BHP rallied 1.18% and Rio Tinto 2.4%. Spot iron ore for import to China improved 70 cents on Friday to US$55.50 a dry ton.

The third-quarter earnings season ramps up this week with reports from 35 S&P 500 companies, including Intel, JPMorgan Chase, Johnson & Johnson, Bank of America, Wells Fargo and General Electric. Analysts expect earnings to be around 5% lower than this time last year.

The US energy ETF pared its best weekly return of the year with a retreat of 0.65% as crude oil stabilised just below US$50 a barrel. West Texas Intermediate crude oil for November delivery settled 20 cents or 0.4% higher at US$49.63 a barrel. S&P 500 energy companies surged 7.8% last week as energy and materials led the market until Friday.

Zinc surged 12.5% before closing 10.1% ahead as a wave of short-covering swept the London Metal Exchange after commodities giant Glencore announced it will cut its zinc output by a third. Read more here. London copper jumped 3%, aluminium 3.3%, lead 6.4%, nickel 3.2% and tin 1.6%. US copper for December delivery advanced 3.3% t0 US$2.42 a pound.

Further weakness in the US dollar helped gold push to a six-week high. Gold for December delivery settled $11.60 or 1% ahead at US$1,155.90 an ounce. The NYSE Arca Gold Bugs index jumped 6.22%.  

Europe's benchmark index sealed a sixth straight gain, its longest winning run since July. The Stoxx Europe 600 added 0.33% on Friday for a weekly gain of 4.3%. Germany's DAX put on 1.04%, France's CAC 0.54% and Britain's FTSE 0.65%.

The dollar was this morning buying 73.27 US cents.

TRADING THEMES TODAY

CONSOLIDATING THE GAINS: A subdued start to trade appears likely, but any weakness is a reflection of how far we travelled last week and how fast, rather than any red flags from the US on Friday. Wall Street noodled around as the energy and materials sectors took a predictable breather after a phenomenal week. Both sectors look over-extended in the short term and may need a few sessions to work off the excesses. That said, Friday's phenomenal gains in base metals are hard to ignore. Glencore blinked and zinc jumped 10% in a session. That's not an everyday event. US earnings are likely to dictate the market mood this week, but once again the analysts seem to have set the benchmark low enough that most companies should clear it. We'll likely have a choppier week than last week's escalator ride, but there is no reason yet to think the trend will change.

ECONOMIC NEWS: No significant domestic news scheduled today. The Fed looks likely to dominated tonight's US session, with speeches due from three more officials.

Good luck to all.