daytrading sep 2 pre-market

Morning traders.

Market wrap: Shares will open in the red this morning after US stocks eased for the first session in five ahead of tonight's closely-watched monthly jobs report.

The September SPI futures contract ended the night session 49 points or 1.1% weaker at 4256 as metals prices retreated following deterioration in European manufacturing and Chinese export orders.

US stocks rallied after manufacturing data topped expectations and weekly jobless claims improved but quickly gave up those gains as traders locked in profits following four days of steady advance. The Dow ended the session 120 points or 1.03% lower as analysts trimmed their expectations for tonight's monthly jobs report. The S&P 500 lost 1.19% and the Nasdaq 1.3%.

"There is some reserve and perhaps some hesitance going into [tonight's] jobs report," the chief market strategist at Banyan Partners in the US told Bloomberg. "The administration has a huge task in front of it to try to create some kind of willingness on part of business leaders to begin hiring."

The night's US economic data surprised to the upside, with national manufacturing output expanding despite several regional declines, and weekly claims for unemployment benefits falling by 12,000 to 409,000. The ISM factory index eased from 50.9 to 50.6, confounding expectations for a contraction to 48.5 and raising doubts about the need for the Federal Reserve to launch another stimulus program this month.

"Every time you get some positive data for the economy, people think the Fed will take the possibility of a QE3 off of the table," a money manager for Christiana Trust told Bloomberg. "We may not like it, but we'll probably need to get used to slower growth."

European markets fell in early trade after manufacturing contracted last month for the first time in two years. Germany's DAX closed 0.94% weaker but Britain's FTSE (+0.45%) and France's CAC (+0.28%) reversed losses following the bright start to US trade.

Industrial metals lost ground as traders focused on the export side of yesterday's Chinese manufacturing report and fretted about the demand implications of the decline in European manufacturing. In London, copper fell 1.4%, aluminium 0.7%, lead 1.7%, nickel 1.9%, tin 1.3% and zinc 2.4%. US copper was recently off 1.5%.

"The EU manufacturing data has been worse than expected and now people are waiting for the non-farm payrolls data [tonight] to see what the Fed does," a VTB Capital analyst told Reuters. "Everybody is hoping for a third round of quantitative easing."

Precious metals moderated two days of gains as a rising US dollar reduced the demand for hedges. Gold for December delivery dropped $3.30 or 0.2% to US$1,828.40 an ounce. Silver for December delivery lost 14 cents or 0.3% at US$41.63 per ounce.

Oil was lately little changed for a second straight session as weakness in European manufacturing balanced positive surprises in China and the US. Crude for October delivery was recently down 7 cents or 0.1% at US$88.73 a barrel.

TRADING THEMES TODAY

REDUCING EXPOSURE: Caution is likely to dominate today's Australian trade following a predictable overnight retreat in the US ahead of tonight's monthly jobs report. We're in one of those bizarre periods where US traders appear to fear good economic news more than bad because the former reduces the likelihood of another round of Federal quantitative easing. There was a brief burst of enthusiasm following last night's manufacturing and unemployment reports and then the market sold off. Overnight losses in metals will likely weigh on our mining sector today. Financials was the worst of sectors in the S&P 500, so our banks may also come under the cosh. No obvious havens with gold/silver also down, but there's plenty of life in small caps despite the general market conditions.

ECONOMIC NEWS: The domestic calendar is empty and there are no major Asian releases today, leaving the spotlight squarely on tonight's US non-farm employment change and unemployment reports. Also due tonight in the US: average hourly earnings.

Good luck to all.