Daytrading Feb 9 pre-market

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    Morning traders. Thanks Trees and after-market regulars.

    Market wrap:

    The share market will have to overcome several hurdles to extend its record run today, including a leadership spill in Canberra, weak Chinese trade data and a soft close on Wall Street as a Greek debt downgrade and concerns over rate rises weighed on US stocks.

    The March SPI 200 futures contract edged up six points or 0.1% on Saturday morning to 5758, keeping alive the possibility of a record 13th straight rise for the benchmark share index, the ASX/S&P 200. However, the outlook dulled over the weekend with news of a record Chinese trade surplus and a spill motion in Canberra at 9am EST that threatens to unseat Prime Minister Tony Abbott.

    The S&P 500 rallied within 1% of its December all-time high before falling to a loss of  seven points or 0.34%. The index gained 3% for the week, its best return in almost two months. The Dow retreated 61 points or 0.34% on Friday for a weekly return of 3.8%, its best in more than a year.

    US stocks turned lower as investors fretted that unexpectedly strong employment data released on Friday increased the likelihood that the Federal Reserve will raise its key lending rate by the middle of the year. The economy created 257,000 jobs last month, 27,000 more than economist expected. November and December gains were also revised substantially higher - the revised November increase of 423,000 was the strongest in 18 years. Average hourly earnings surged 0.5% last month, the largest increase in six years.

    "Employment growth is clearly on fire and it's beginning to put upward pressure on wage growth," Paul Ashworth, chief US economist at Capital Economics in Canada, told Fairfax. "The Fed can't wait much longer in that environment."

    Friday's early gains dissipated after Standard & Poor's cut Greece's long-term debt rating, citing uncertainty surrounding the new government's attempts to renegotiate the country's bailout terms. The government has until February 16 to apply for an extension to its bailout program. The existing program is due to expire on February 28.

    “People have been ignoring negative news about Greece this week, and today’s downgrade is a delayed reaction that further problems with Greece can destabilise the euro,” Brian Fenske,  head of sales trading at ITG in the US, told MarketWatch. “There is also concern that the market is toppy. A lot of fundamental investors are afraid to buy stocks when earnings estimates have come down.”

    Concerns about the pace of the Chinese economy increased over the weekend with the release of data showing both exports and imports tumbled last month. Exports were down 3.3% on the year before and imports 19.9% as domestic demand weakened and commodity prices slumped. While January data is often affected by the timing of the Chinese New Year, both readings fell far short of economists' estimates.

    "It's a very strange data print," Andrew Polk, economist at the Conference Board in China, told Reuters."The import data suggests a substantial slowdown in the industrial sector. The first quarter looks to be pretty horrible."

    Back home, Prime Minister Abbott confronts a 'spill motion' in Canberra that may lead to a change of Prime Minister. Liberal MPs will vote in a secret ballot whether to declare the leadership and deputy leadership positions of the party vacant. Depending on the outcome, a vote may then be held on the leadership.

    Market heavyweights BHP and Rio Tinto fell back in US trade despite an up-tick in the price of iron ore. BHP lost 2.7% and Rio Tinto 2.53%. Spot iron ore for import to China on Friday improved 70 cents to US$61.80 a dry tonne, the spot price's second gain in several weeks.

    Oil continued last week's recovery following news of a strike by US refinery workers and another decline in the deployment of drilling rigs in the US. West Texas Intermediate crude oil for delivery in March settled $1.21, or 2.4% ahead at US$51.69 a barrel, extending the total gain for the week to 7.2%.

    Gold stocks suffered a heavy hit in the US after the scale of US jobs gains forced economists to revise their expectations for rate rises this year. The NYSE Arca Gold Bugs index tumbled 5.43% as gold for April delivery fell $28.10 or 2.2% to settle at US$1,234.60 an ounce.

    Copper was pressured by a rising greenback, but losses were cushioned by the recovery in oil. In London, copper eased 1.22%, aluminium 0.8% and tin 2.43%. Zinc lifted 0.86%, lead 0.27% and nickel 0.83%. US copper for March delivery fell 0.2% or two-thirds of a cent to US$2.59 a pound.

    Europe's benchmark index rose for a fifth straight day as US jobs data soothed worries about the pace of global growth. The Stoxx Europe 600 gained 0.21% as Germany's DAX slipped 0.54%, France's CAC 0.26% and Britain's FTSE 0.19%.

    The dollar was this morning buying 77.6 US cents, down almost half a cent from Friday on the Liberal Party's leadership woes and soft Chinese trade read.


    TONY, GLENN AND CHINA: It would take a better brain than mine to accurately predict how this session will unfold, given the uncertainty in Canberra, an up-coming speech by the Governor of the Reserve Bank, dismal Chinese trade data, falls on Wall Street and the momentum built up on the local trading floor during this record run. Just about anything seems possible. The Liberal Party vote is likely to cap risk appetite at the open, depending on how quickly events unfold - the market does not like uncertainty. Once the dust settles in Canberra, attention switches to a speech by Glenn Stevens at a Sydney luncheon at 11.15am EST. This is certain to attract more attention than usual since rate cuts have been the driving force behind the record run on the market over the last two weeks. Throw in some truly dreadful Chinese trade numbers and falls on Wall Street and you would normally expect the market to retreat. But these are abnormal times.

    ECONOMIC NEWS: RBA Governor Glenn Stevens is due to address the RMB Clearing Bank Luncheon in Sydney at 11.15am EST. January job ads follow at 11.30am. The G20 meets tonight. A speech by a member of the Federal Reserve and the labour market conditions index are the highlights of a thin night in the US.

    Good luck to all.
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