Daytrading Feb 4 pre-market

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    Morning traders. Thanks Trees and after-market regulars.

    Market wrap:

    Shares are poised to open at their strongest level in more than six and a half years after fierce rebounds in oil and copper helped sweep US stocks higher for a second night.

    The March SPI 200 futures contract soared 97 points or 1.7% to 5740 following strong gains on Wall Street, a Reserve Bank rate cut yesterday, oil's highest settlement of the year and copper's biggest jump in a year and a half. BHP and Rio Tinto rallied to two-month highs in US trade, adding 5.58% and 4.76%, respectively.

    Energy stocks and cyclicals led the way as the S&P 500 built steadily towards a closing gain of 29 points or 1.44%. The Dow put on 305 points or 1.76% and the Nasdaq 51 points or 1.1%.

    "With yet another central bank cutting rates, the case for additional upside in equities remains intact,” Brenda Kelly, chief market strategist at IG in the US, told MarketWatch. “Add to this the bounce in oil prices and we have some additional enthusiasm for risk assets.”

    Energy remained the standout sector in the US, rising 2.74% as a rebound in crude extended beyond 20% over four sessions. West Texas Intermediate crude oil for March delivery flew as high as US$54.24 before settling $3.48 or 7% ahead at US$53.05 a barrel. The rally came as traders bet that a sharp decline in the deployment of drilling rigs in the US revealed last week heralded an end to the oversupply issues that drove the recent collapse in crude.

    The strength of the rebound in oil infected other markets, most notably copper. London copper rallied 3.3% overnight, its largest one-day advance since July 2013. The metal sometimes known as 'Doctor Copper' because of its close relationship with global economic growth fell 13% last month to its weakest point in five and a half years.

    "If we haven't already seen the lows [in copper] for this year then we are very close to them," Guy Wolf, a strategist at broker Marex Spectron, told Reuters. "Everyone knows the problems with the world but there's a growth boost to come from low oil prices and China is not collapsing. Add these factors together with a record-low short position on the LME [London  Metal Exchange] and the market looks oversold."


    US copper for March delivery was recently up 3.6% or around nine cents at US$2.58 a pound. Other London action saw aluminium rise 1.1%, tin 0.5% and zinc 1.3%. Lead closed unchanged and nickel slipped 0.1%.

    Also helping sentiment in the US was corporate merger activity, solid car sales data and signs of compromise over Greece's debt burden. Retailer Office Depot jumped more than 20% following reports of merger discussions with office supply chain Staples. Ford and General Motors both rallied after reporting improved January sales.

    European stocks were helped by an 11.27% surge in Greece's benchmark share index after the nation's Australian-born finance chief backed down from a demand that international lenders reduce Greece's debt burden. The Stoxx Europe 600 advanced 0.82% as Germany's DAX added 0.58%, France's CAC 1.09% and Britain's FTSE 1.32%.

    Gold stocks declined as Greece's retreat dulled demand for havens. The NYSE Arca Gold Bugs index fell 2.46% after gold for April delivery dropped $16.60 or 1.3% to settle at US$1,260.30 an ounce.

    Wall Street shrugged off news that factory orders declined during December for a fifth straight month. New orders were down 3.4% on November as the surging dollar made it harder to sell US-made goods overseas.

    The spot price for iron ore for import to China yesterday turned higher for the first time in several weeks, rising 70 cents to US$62 a dry tonne.

    The dollar was this morning buying 78.05 US cents after yesterday falling as low as 76.52 US cents.

    TRADING THEMES TODAY

    RALLY KEEPS GIVING: What a fortnight this has been. There appears to be no end in sight to a rally that has driven the market up more than 400 points in nine sessions and offers a strong possibility of another 100 odd points today and an extraordinary tenth straight gain. I can't say when was the last time the ASX 200 advanced for 10 straight sessions but this is a very, very rare event indeed. Resource stocks appear primed to do the heavy lifting today, although it's worth noting that most made their lows several days, weeks or even months ago. Spot iron ore finally broke a losing run that began while I was on the beach at the start of the year. Too early yet to say if yesterday's rise marks a turning point - we've been here before. Copper's bounce looks more meaningful because of its scale. Gold stocks and biotechs missed last night's US rally.  

    ECONOMIC NEWS: The AIG Services Index is due at 9.30am EST. HSBC releases its services PMI for China at 12.45pm, but the impact is generally much more muted than the mining version. Europe has retail and services figures out tonight. Well Street has some meaty reports to digest, including the ADP non-farm employment report, twin services PMIs and crude oil inventories.

    Good luck to all.
 
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