Daytrading Feb 3 pre-market

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    Morning traders. Thanks Trees and after-market regulars.

    Market wrap:

    Shares are eying a five-month high ahead of this afternoon's Reserve Bank rate decision after a choppy session on Wall Street ended with strong gains.

    The March SPI 200 futures contract rallied 42 points or 0.75% to 5613, positioning the share market for a shot at a ninth straight advance. The ASX 200 has rallied more than 350 points from its January low amid speculation that the Reserve Bank will cut the cash rate at least twice this year.  

    A rebound in energy stocks helped Wall Street overcome a round of soft domestic economic data. The S&P 500 fell to its lowest point in six weeks in early trade before reversing to a closing gain of 26 points or 1.3%. The Dow added 196 points or 1.14% and the Nasdaq 42 points or 0.9%.

    "The ecodata was mixed, kind of signaling some concern but nothing that is catching anyone by surprise," Ken Polcari, director of the NYSE floor division at O’Neil Securities in the US, told Reuters. "They are going to make a positive out of the energy story, that kind of gives an overall better tone to the market."

    Manufacturing growth slowed last month to its weakest pace in a year, hamstrung by a strong greenback and weak overseas demand. The Institute of Supply Management index declined to 53.5 from 55.1 in December, below the median forecast of 54.5 among economists polled by Bloomberg. Other reports showed consumers spent 0.3% less in December than the previous month, despite falling energy prices, and construction spending increased less than expected.

    “ISM data was disappointing and a proof that US economy is not growing as it did over the past few quarters," Dan Greenhaus, chief global strategist at BTIG in the US, told MarketWatch. "But we are still expecting solid payrolls numbers on Friday."

    Energy stocks led the turnaround, rising 3.06% as crude extended Friday's end-of-month short-covering rally. West Texas Intermediate crude oil ran as high as US$50.56 a barrel, a four-week peak, before settling $1.33 or 2.8% ahead at US$49.57. Friday's rise followed news of a sharp reduction in the number of drilling rigs deployed in the US.

    Australian mining majors BHP and Rio Tinto joined the US rally, rising 2.12% and 2.38%, respectively, despite a mixed session for iron ore yesterday. Spot iron ore for import to China slipped 40 cents to US$61.30 a dry tonne, while ore delivered to Qingdao, China, rallied 0.4% to US$62.45.

    US gold stocks overcame a flat session in the precious metal. The NYSE Arca Gold Bugs index rose 1.27% as gold for February delivery settled steady at US$1,279.20 an ounce.

    Base metals were mixed but showed minimal change amid speculation that yesterday's news of a contraction in Chinese manufacturing - the first in more than two years - will force the Chinese government to introduce fresh stimulus measures. In London, copper edged up 0.09%, aluminium 0.38%, nickel 1.06% and zinc 0.14%. Lead lost 0.54% and tin 0.92%. US copper for March delivery was recently up 0.2% or two-thirds of a cent at US$2.50 a pound.

    Europe's benchmark index inched higher as traders kept a wary eye on negotiations between Greece's new government and international lenders. Greek sovereign bond yields fell after new Prime Minister Alexis Tsipras insisted Greece will remain within the euro-zone. The Stoxx Europe 600 edged up 0.06% as Germany's DAX put on 1.25%, France's CAC 0.52% and Britain's FTSE 0.5%.

    The dollar was this morning buying 78.08 US cents.

    TRADING THEMES TODAY

    WAITING FOR GLENN: Institutional traders have taken a large bet that the RBA is going to cut the cash rate at least twice more this year, likely starting this afternoon. Our futures say there is more in it today if the bulls can surmount obvious overhead resistance and the shadow of this afternoon's meeting. It has been more than a year since a Reserve Bank meeting mattered much in trading terms, so it might be timely to offer a reminder that you can get the decision here the moment it happens at 2.30pm. (The figure that matters is the "Cash rate" on the right-hand side, currently at 2.5%.) As I said yesterday, I'm not sure this rally has much more to give, whatever this afternoon's decision - but I'm just a mug punter and anyone shorting over the last two weeks has likely had their fingers burnt.

    ECONOMIC NEWS: A busy day for domestic data includes monthly trade and building approvals data at 11.30am EST, but the main event is a 2.30pm RBA policy statement and rate decision. A low-key session tonight in the US includes factory orders, vehicle sales and economic optimism.

    Good luck to all.
 
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