Daytrading Feb 5 pre-market

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    Morning traders. Thanks Trees and after-market regulars.

    Market wrap:

    A late dive on Wall Street and a plunge in crude oil point to a possible pause today in the Australian share market's strongest rally in two years.

    The March SPI 200 futures contract slipped ten points or 0.2% to 5716 as resource stocks retreated in the US. The ASX 200 has put on almost 500 points in the last ten sessions, the index's longest winning run since January 2013.

    A stuttering night on Wall Street ended with a dramatic swoon just before the closing bell following news that talks between Greece and its troika of international lenders may be in trouble. The European Central Bank cancelled a waiver that allowed Greek sovereign debt to be used as collateral against loans because there was increasing uncertainty that the talks will lead to a successful conclusion. Read more here.

    The S&P 500, which had been underwater for most of the night before edging higher in the second half of the session, plunged to a loss of nine points or 0.44%. The Dow was the best of the sectors as well-received earnings from Disney helped the blue-chip index cling to a gain of seven points or 0.04% despite falling 110 points after the Greek debt news. The Nasdaq eased 11 points or 0.23%.

    “This happened sooner than expected and the market’s a little shocked,” Michael Block, chief equity strategist at Rhino Trading Partners in the US, told Bloomberg. “This is the ECB turning the screws, not going to let Greek banks die but the clock is ticking. People thought the ECB would do this at the end of the month and that perhaps before then, a deal could be struck. I guess not.”

    US stocks took a breather from two nights of solid gains as a private payrolls report missed expectations and crude pared a four-day rally. ADP's monthly update showed private US companies hired 213,000 new workers last month, below the 223,000 anticipated by economists. Recent worries about a slowdown in US growth were soothed by news that an index of services activity ticked up to 56.7 last month from a six-month low of 56.5 the previous month.

    Energy stocks fell 1.65% after crude oil slumped almost 9%, paring a four-session rally of more than 20%. West Texas Intermediate crude oil for March delivery fell $4.60 or 8.7% to settle at US$48.45 a barrel after the US Energy Information Administration said US stockpiles increased by 6.3 million barrels last week, dashing hopes that a recent oversupply was easing.

    Mining heavyweights BHP and Rio Tinto retreated from two-month highs in the US as iron ore resumed its downward trajectory. BHP fell 2.28% and Rio Tinto 2.24% after spot iron ore for import to China yesterday dropped 60 cents to US$61.40 a dry tonne, a new five-and-a-half-year closing low.

    Copper hit a two-week high after the People's Bank of China's announced fresh stimulus measures, slashing the amount of money that banks must hold in reserve. The reserve ratio requirement was reduced by 50 basis points. In London, copper rose 0.44%, lead 0.97% and tin 0.26%. Zinc lost 0.7%, aluminium 0.63% and nickel 1.37%. US copper for March delivery was recently up 0.3% or more than a cent at US$2.59 a pound.

    "This [the reserves ratio cut in China] will give temporary support to the market. Whether or not that continues will depend on whether people believe it will be enough to filter into the wider economy," Gayle Berry, metals strategist at Jefferies, told Reuters.

    Gold stocks rallied as the Chinese news and euro-zone scare boosted alternative stores of wealth. The NYSE Arca Gold Bugs index advanced 1.34% as gold for April delivery rallied $4.20 or 0.3% to settle at US$1,264.50 an ounce.

    Earlier, European stocks advanced on optimism that talks between Greece and its international lenders were making progress. The Stoxx Europe 600 rose 0.49% as Germany's DAX added 0.39%, France's CAC gained 0.18% and Britain's FTSE lost 0.17%.

    The dollar was this morning buying 77.81 US cents.


    BEWARE OF GREEKS BEARING DEBTS: A night of steady improvement in the US ended with a sudden dive following late news that the ECB has lost confidence that Greece will reach a settlement with its lenders. The decision spooked investors because it raises the prospect of a re-run of the bank runs and stock market tremors of a few years ago during the last euro-crisis. The news broke too late in the session to get a measured assessment on Wall Street - the reaction there was knee-jerk. Gold did not react much, which suggests there may not be much to this after all. However, Asian markets will start the session with considerable uncertainty. Back home, we're into earnings season. Among those reporting today are DOW, FXL, REA and TAH (source: Fairfax).

    ECONOMIC NEWS: Home sales data are due at 11am EST, followed by retail sales at 11.30am. Tonight's US highlights are weekly jobless claims, trade data, Challenger job cuts and preliminary non-farm productivity and unit labour costs.

    Good luck to all.
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