daytrading sep 20 pre-market

Morning traders.

Market wrap:

A soft open is likely after stimulus moves in Japan and solid US housing news produced meagre gains on Wall Street.

The September SPI 200 futures contract ended the night session five points or 0.1% weaker at 4410 as futures traders bet that yesterday's 0.5% rise on the ASX exceeded overnight advances in the US and Europe.

The S&P 500 broke a two-day losing run but finished below its highest point of the session as last week's near-five-year closing peak offered resistance. The benchmark index advanced 0.12%, the Dow 13 points or 0.1% and the Nasdaq 0.16%.

"Markets are relying a lot on the support of central banks to stay alive here," the president of Farr, Miller & Washington in the US told Bloomberg. "The US economy is behaving in a constructive way, not fabulous but resilient."

Stocks found early support in Japan's unexpected announcement yesterday that its central bank will increase its asset buying to support its slowing economy. The Bank of Japan increased its asset purchases by 10 trillion yen or US$126.7 billion to roughly 80 trillion yen. The news helped the Nikkei rally 1.19% yesterday.

Stocks exposed to the US housing market were behind much of the overnight strength after August sales topped expectations and housing starts narrowly missed economists' targets. Sales of existing homes jumped 7.8% to the strongest level since May 2010. Housing starts increased 2.3% but the annual rate of 750,000 fell short of the 775,000 pace economists had expected.

European markets rebounded from two days of falls. Germany's DAX put on 0.59%, France's CAC 0.55% and Britain's FTSE 0.54%.

Oil's sudden reversal continued overnight as a third day of declines pushed the US benchmark contract to a six-week low. A market made jittery by Monday's unexpected plunge pushed West Texas crude for October delivery down another $3.48 or 3.65% to US$91.84 a barrel after a US weekly report showed a rise in inventories.

Gold, often used as a hedge against falling currencies, found support in Japan's decision to increase asset buying. Gold for December delivery was lately up $1.20 or less than 0.1% at US$1,772.40 an ounce after rising as high as US$1,781.80.

Copper bucked a generally soft night on the industrial metals market to set a new four-and-a-half month high. In London, copper advanced 0.4% and zinc put on 0.7%. Aluminium dropped 1%, lead 0.2%, nickel 0.4% and tin 1%. US copper for December delivery was recently up one cent or 0.3% at US$3.80 a pound.

"It was really the [Bank of Japan] announcement that spurred the rises today, but this is not going to carry very far. People have seen improved sentiment, they have seen the central banks take action, so the question is: does all this feed into improved activity?" a Credit Suisse metals analyst told Reuters. "Real demand is still slow. The big questions are: will it improve? How much? How fast?"

TRADING THEMES TODAY

WAITING FOR CHINA: After locking in a nice bump higher yesterday, the ASX will likely tread water for the first few hours this morning before deciding whether the 12.30pm EST monthly Chinese manufacturing update (see below) is reason to rally or retreat. Wall Street had a look at last week's closing high overnight and turned back - it will likely need a pretty strong impetus to push it higher from here. The sudden deterioration in the oil market has seasoned traders scratching around for answers and I haven't found a convincing explanation. A falling oil price is generally supportive for the stock market because of reduced input costs for companies, but jitters in one market tend to unsettle others. The pace of this decline has been so rapid that the bold may consider starting to get set for a rebound if our energy stocks cop a hiding today. (The recent recovery in iron ore shows how fast markets can snap back when they turn.)

CHINESE MANUFACTURING UPDATE: Today brings a first glimpse of this month's manufacturing strength in the biggest consumer of Australian raw materials. Last month's HSBC "flash" or preliminary purchasing managers' index surprised to the downside, dropping to 47.6, the lowest level this year. The question is whether the recent round of monetary easing by central banks around the world has yet translated into real-world demand? We'll find out at 12.30pm EST. Bear in mind that hopes for further stimulus in China mean that a negative figure today will not necessarily fuel a stock market sell-off - for the last few months all news has somehow been good news. Go figure.

ECONOMIC NEWS: Japan releases trade balance data at 9.50am EST. China releases preliminary manufacturing numbers at 12.30pm (see above). Europe has a raft of manufacturing and services activity reports tonight. The US has the flash manufacturing PMI, plus weekly jobless claims, Philly Fed manufacturing, a leading index and natural gas storage.

Good luck to all.