Daytrading Feb 16 pre-market

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    Morning traders. Thanks Trees and after-market regulars.

    Market wrap:

    Shares look set to resume Friday's bull run after US stocks closed at record levels and key commodities rallied ahead of a big week for domestic earnings, a week-long holiday in China and a US holiday tonight.

    The March SPI 200 futures contract advanced 29 points or 0.5% to 5851 amid speculation about further rate cuts following a downbeat assessment of the economy from Reserve Bank Governor Glenn Stevens last week.

    Energy and tech stocks led a rally on Wall Street as crude rebounded and optimism about Greece's debt negotiations offset weak US economic data. The S&P 500 rose nine points or 0.41% to an all-time closing high of 2,097 and a weekly gain of 2%. The Dow added 47 points or 0.26% to end the session at 18,019, short of a record above 18,000 for the first time this year. The Nasdaq put on 36 points or 0.75% to end at at its highest level since March 2000.

    Wall Street took its cues from Europe, which rallied following reports that Greece and its European partners are moving closer to a resolution ahead of the resumption of debt negotiations tonight. The Stoxx Europe 600 rose 0.6% to a seven-year high as German economic growth surpassed expectations, pushing the DAX to a record close. The DAX added 0.4%, France's CAC 0.69% and Britain's FTSE 0.67%.

    Gains in the US were limited by consumer sentiment falling short of economists' expectations. The UMich Consumer Sentiment index sagged to a preliminary reading of 93.6 this month from a final January reading of 98.1, an 11-year high. Economists had expected the index to hold around January levels as declining energy prices and a roaring share market put more cash in consumers' pockets.

    Energy shares were again a standout, jumping 2.12% as oil rallied for a third week in response to a sharp fall in US rig deployment and investment in exploration and development. Rig deployment slumped to a five-year low this month and was down almost 25% from the start of December, according to data from Baker Hughes. West Texas Intermediate crude oil  for delivery in March settled $1.57 or 3.1% ahead at US$52.78 a barrel on Friday for a weekly gain of 2.1%.

    “The recent bounce back in the price of [oil] appears to have been driven by the sharp drop in the number of rigs drilling for oil and the slew of announcements from major oil companies that they are cutting back on investment,” Tom Pugh, commodities economist at Capital Economics, told MarketWatch.

    The market gave mixed signals on risk, with the small caps benchmark closing at a record while prices in the options market suggested institutional investors were buying insurance against a pullback. The Russell 200o rallied 0.56% to an all-time closing high even as options traders pushed the price of puts - bets on a falling market - to a nine-year high.

    “The options market is signalling some warnings signs," Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research in the US, told MarketWatch. "Namely, the open interest in put/call ratio is at very high levels. That indicates that either investors are very nervous or they are positioning for a sharp pullback."

    BHP and Rio Tinto moved strongly higher in the US following a third straight rise in the price of iron ore. BHP added 4.88% and Rio Tinto 4.71%. Spot iron ore for import to China lifted 50 cents to US$63.30 a dry tonne for a weekly gain of 2.4%.

    Gold stocks edged higher as a second day of gains pared a losing week for the metal. The NYSE Arca Gold Bugs index improved 0.31% as gold for April delivery settled $6.40 or 0.5% ahead at US$1,227.10 an ounce. The contract declined 0.6% last week.

    Base metals closed mixed on the London Metal Exchange as volumes dropped away ahead of this week's Lunar New Year holiday. London copper edged up 0.07%, lead 0.85%, tin 1.53% and zinc 0.19%. Nickel fell 0.54% and aluminium 0.27%. US copper for March delivery closed flat at US$2.60 a pound.

    The dollar was this morning buying 77.85 US cents.

    TRADING THEMES TODAY

    BUYING YIELD: The market took one look at RBA Governor Glenn Stevens' testimony to the House of Representatives on Friday and concluded the stock market is the place to park your cash for your foreseeable future because bank deposit rates are likely going lower. The result was another strong up-leg in a rally that began four weeks and almost 600 points ago and looks set to continue this week. The minutes from the last Reserve Bank policy meeting are released tomorrow. There are two obvious risk dampeners tonight in Greek debt talks and a Wall Street holiday, however, the market ended the week with so much momentum that it is hard to picture anything less than a solid rise today. China pretty much closes this week for Lunar New Year holidays, an event with implications for metals demand. Back home, the domestic earnings season continues today with reports from AZJ, BEN, GEM IMD and UGL .

    ECONOMIC NEWS: January new motor vehicle sales are due at 11.30am EST. Eurogroup finance ministers reconvene in Brussels tonight to resume debate about the terms of Greece's debt repayments. Trading on Wall Street is suspended for the President's Day public holiday.

    Good luck to all.
 
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