Daytrading Feb 11 pre-market

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    Morning traders. Thanks Trees and after-market regulars.

    Market wrap:

    The share market looks set to advance after speculation about a European compromise on Greece's debt helped Wall Street overcome weakness in key resources.

    The March SPI 200 futures contract rallied 24 points or 0.4% to 5777 despite a plunge in crude and reversals in BHP and Rio Tinto.

    US stocks pushed back towards record levels amid optimism that Greece will buy a stay of execution over a funding crunch at a meeting of the Eurogroup tonight. The S&P 500 rallied 22 points or 1.07% to close within 1% of December's all-time closing high. The Dow put on 140 points or 0.79% and the Nasdaq 62 points or 1.31%.

    "Clearly the market thinks some resolution's going to come out of this that's going to make bondholders not suffer the consequences, and that's why the market is up," Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in the US, told Reuters.

    The market extended gains despite a swift denial from German Finance Minister Wolfgang Schaeuble of rumours that Greece's bailout funding will be extended tonight for six months, allowing the new government time to renegotiate unpopular austerity measures demanded by international lenders. Schaeuble said Germany's position that Greece should honour the terms of its existing loans was unchanged. Read more here.

    European markets resumed their recent up-trend as Greece's decision to proceed with privatising the country's main sea-port was interpreted as a sign that the two sides are drawing closer to a compromise. The Stoxx Europe 600 added  0.64% as Germany's DAX rose 0.85% and France's CAC 0.97%.

    Britain's resource-heavy FTSE slipped 0.12% following declines in oil and copper.  West Texas Intermediate crude oil for delivery in March slumped $2.84 or 5.4% to settle at US$50.02 a barrel after the International Energy Agency said it expected oil to average US$55 a barrel this year. The price prediction represented a sharp downgrade from the agency's outlook last year for an average price of US$100 a barrel this year.

    “The rules of the oil market have changed,” the IEA said in a report overnight. “The clear distribution of roles between OPEC and non-OPEC countries that governed the oil market for the last 30 years has been suspended, at least for now. Non-OPEC producers cannot, for now, count on OPEC to act as swing supplier and cut output in the event of a price drop.” Read more here.

    Base metals fell after a report yesterday showed Chinese inflation slid to a five-year low last month. In London, copper dropped 1.4%, aluminium 2.2%, lead 1%, nickel 2.3%, tin 0.1% and zinc 2.1%. US copper for March delivery was recently off 1.1% or more than three cents at US$2.55 a pound.

    Iron ore resisted the headwinds, with the spot price for import to China yesterday rising 60 cents to US$62.20 a dry tonne.  BHP lost 1.79% and Rio Tinto 2.55% in US trade.

    Gold fell for a third session as traders favoured risk assets over havens. Gold for April delivery retreated $9.30 or 0.8% to settle at US$1,232.20 an ounce. The NYSE Arca Gold Bugs index shed 1.61%.

    The dollar was this morning buying 77.74 US cents.


    TWO-SPEED MARKET: For all the talk about Greece, Wall Street appeared determined to rally last night regardless of what happened in Europe. If the prospect of a debt compromise was the main driver of the rally, the market 'ought' to have dropped when Germany poured a bucket of water on hopes for a deal extension. We can also discount oil as a factor in moving equity markets for the time being - it plunged 5% and Wall Street didn't blink. However, BHP and Rio came under selling pressure, which suggests the resource sector will be a drag here following overnight declines in metals. The spec sector has fired up this week and is offering good trade opportunities.

    ECONOMIC NEWS: Westpac's consumer sentiment for February is due at 10.30am EST followed by December home loans at 11.30am. All eyes will be on tonight's "Eurogroup" meeting of nations that share the euro as a common currency. Crude oil inventories are the highlight of a data-light session tonight in the US.  

    Good luck to all.
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