Daytrading Sep 12 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

Shares look set for a flat open after US stocks reversed early falls to close little changed as a recovery in oil offset weak jobless claims and metal prices.

The September SPI 200 futures contract edged up five points or 0.1% to 5552 after the S&P 500 turned a dive of ten points into a closing gain of one point or 0.07%. The Nasdaq put on five points or 0.12% and the Dow lost 10 points or 0.12%.

The market opened in the red after claims for jobless benefits jumped to a two-month high and President Barack Obama told the nation he will expand the US's campaign against Islamic militants in Iraq and Syria. The President declared the US will "degrade, and ultimately destroy, [ISIS] through a comprehensive and sustained counter-terrorism strategy”.

“Geopolitical events of course always make the market nervous,” Dan Miller, director of equities at GW&K Investment Management in the US, told Bloomberg. “We’re just stuck in a tight range because the market has been so strong this year and every now and then the market needs a little time to cool off."

First-time claims for unemployment benefits increased by 11,000 to 315,000 last week, their highest level since late June. However, analysts attributed the unexpected weakness to distortions in the data caused by last Monday's Labor Day holiday.

“As a proportion of payrolls, claims are now close to all-time lows, so it would be unreasonable to expect a significant further decline in the headline numbers over the next year," Ian Shepherdson, chief economist at Pantheon Macroeconomics in the US, told MarketWatch. "Equally, though, we see no reason for claims to starting heading back up, and they are consistent now with payroll gains of 250K or more.”

Small caps and energy stocks helped lead a turnaround as oil bounced off an eight-month low. The Russell 2000 index of small caps rallied 0.63% and energy shares put on 0.1% after earlier falling as much as 1.2%. West Texas Intermediate crude oil for October delivery rose $1.16 or 1.3% to settle at US$92.83 a barrel after the US announced increased sanctions against Russia for its support for separatists in Ukraine. The contract had lately improved further to US$93.12.

European stocks declined after the European Union said it will unveil fresh sanctions against Russia tonight. The Stoxx Europe 600 index slipped 0.12% as Germany's DAX eased 0.09%, France's CAC 0.22% and Britain's FTSE 0.44%.

Australia's largest miners closed mixed in US trade as iron ore slipped closer to the US$80 a tonne mark. BHP fell 1.09% and Rio Tinto edged up 0.13%. Spot iron ore for import to China yesterday dropped 30 cents to US$81.90 a dry tonne.

Copper neared a three-month during a soft session for base metals on the London Metal Exchange following yesterday's weak Chinese inflation data. Consumer inflation softened more than expected last month, escalating concerns that the Chinese economy is losing momentum. In London, copper lost 0.5%, nickel 1.7%, aluminium 0.9% and zinc 1.9%. Tin gained 0.4% and lead 0.1%. US copper for December delivery was recently off 0.5% or almost two cents at US$3.10 a pound.

Gold's losing run extended into a fourth session as the US dollar rallied on speculation that the Federal Reserve will toughen up its rate outlook at next week's policy meeting. Gold for December delivery retreated $6.30 or 0.5% to settle at US$1,239 an ounce and was recently at US$1,241.10.

The dollar was this morning buying 91.08 US cents, off more than half a cent as strength in the greenback offset yesterday's strong domestic jobs news.

TRADING THEMES TODAY

DRIFT: A muddled set of leads for the last day of a broadly negative week. Plus points: Wall Street and oil bounced off their lows, gold stocks edged higher, Rio held its ground, US small caps rallied strongly. Negatives: increased geopolitical tensions, declines in Europe, gold down, most base metals down, iron ore down, BHP down. Overall, there don't appear to be enough positives to put a rocket under our market today, but nor is there cause to anticipate a big fall. Likely we're in for more of the same - sideways with a downwards bent.

ECONOMIC NEWS: No significant domestic news scheduled today. Chinese lending and money supply data are due any time before the end of the weekend. Monthly industrial production, retail sales and fixed asset investments are due tomorrow. A light week in the US ends with some chewy data tonight, including monthly retail sales/core retail sales, preliminary consumer sentiment and inflation expectations, import prices and business inventories.

Good luck to all.