Daytrading October 2 pre-market

Morning traders. Thanks Higo, Sak22 and after-market regulars.

Market wrap:

Australian shares look set to trim two days of strong gains at today's open after Wall Street closed mixed as economic worries resurfaced ahead of tonight's September jobs report.

The December SPI200 futures contract declined 18 points or more than 0.3% to 5063 as US stocks staged a late recovery to end the session little changed.

The S&P 500 slumped more than 1% following soft September manufacturing data before reversing to a final gain of four points or 0.2%, the benchmark index's third straight advance. The Dow pared a 162-point mid-session loss to a final deficit of 13 points or 0.08%. The Nasdaq added seven points or 0.15%.

"We're just continuing the pattern of selling into rallies," Peter Boockvar, chief market analyst at The Lindsey Group in the US told CNBC. Last night's weak manufacturing report "is a wake-up call that the US economy is very bifurcated. Also, [the market is] jockeying ahead of payrolls [tonight]."

The market hit reverse early in the session after the Institute of Supply Management's manufacturing index fell to its lowest level in more than two years, exacerbating fears that a strengthening greenback and global slowdown are harming the US economy. The index dropped to 50.2 last month from 51.1 in August.

“ISM manufacturing index came in barely above 50 which is in line with the weakness we are seeing globally,”  Paul Nolte, portfolio manager at Kingsview Asset Management in the US, told MarketWatch. “Earnings can’t improve if economies don’t grow.”

Other reports were more positive. Weekly unemployment claims ticked up by 10,000 to 277,000 last week but remained at a historically low level. Spending on construction accelerated 0.7% during August to the highest level since the GFC. Car sales surged by double digits last month as US manufacturers offered Labor Day deals.

Stocks also reacted to volatility in crude oil, which surged as much as 4% before closing in the red. West Texas Intermediate crude for November delivery settled 35 cents or 0.8% lower at US$44.74 a barrel after earlier rising above US$47. Analysts attributed the swing to an initially positive reaction to yesterday's Chinese factory report, followed by a rethink after weak readings from Europe and the US.

Europe's benchmark index closed lower after the Markit European manufacturing PMI fell to 52 last month from 52.3 in August. The Stoxx Europe 600 shed 0.44%, Germany's DAX 1.57% and France's CAC 0.65%. Britain's FTSE rose 0.18%.

Australia's big two miners closed mixed in US action. BHP gained 1.42% and Rio Tinto eased 0.15%. Spot iron ore for import to China yesterday edged up 10 cents to US$54.40 a dry ton.

Most base metals lost ground following a burst of short covering on Wednesday. In London, copper gave back 1.2%, aluminium 0.7%, lead 1.4%, nickel 3.1% and tin 0.6%. Zinc improved by 0.1%.

Gold declined for a fifth straight session amid caution ahead of tonight's US jobs report, which could potentially tip the Federal Reserve towards an October rate rise. Gold for December delivery settled $1.50 or 0.1% weaker at US$1,113.70 an ounce after hovering between US$1,118 and US$1,110.

The dollar was this morning buying 70.3 US cents.

TRADING THEMES TODAY

CONSOLIDATING THE GAINS: An important session coming up. After two days of strong gains and with a US jobs report tonight and a public holiday affecting parts of Australia on Monday, the obvious path today is lower. The XJO has only strung together three-session rises twice in the nine weeks since the plunge from 5700 began, so the odds of a third straight rally are not great. However, the market mood seems markedly more optimistic over the last two sessions, so I wouldn't rule it out. Turning point? Be nice to think so, but it's possible I'm just drinking more coffee than usual. The August retail sales report and a speech by ECB head honcho Mario Draight at 11.30am EST may have an impact on how we finish up.  Finally, a reminder that the ASX is open for trade on Monday despite the Labour Day public holiday in NSW, Queensland, SA and the ACT. Monday is not classed as a settlement day.

ECONOMIC NEWS: August retail sales figures are due at 11.30am EST. European Central Bank President Mario Draghi is due to deliver a speech in New York at around the same time. The September employment report is tonight's potential market-mover in the US. Also due: unemployment rate, average hourly earnings, factory orders and a speech by another Fed official.

Good luck to all.