daytrades august 3 pre-market

Morning traders. Keep those tin hats on.

Market wrap: Australian shares will start today's session at a new 11-month low after Wall Street extended its longest losing run since the GFC.

The September SPI futures contract ended the night session 76 points or 1.7% lower at 4324, a level last seen in late August last year. Oil fell to a five-week low and gold set a new record.

The S&P 500 fell for a seventh night for only the second time in a decade, losing 2.56% as weak consumer spending fuelled fears that the US economy is skidding back towards recession. The benchmark index closed at its lowest level this year. The Dow dropped for an eighth night, giving up 266 points or 2.19%, and the Nasdaq lost 2.75%.

The falls accelerated after the Senate approved a debt-limit package that averts a sovereign default but has been criticised for making minor reductions in deficits while slowing economic growth. President Obama has now signed the bill into law.

"This debate [over raising the debt ceiling] has left a cloud of uncertainty over the market in terms of what it means," an equities and fixed-income analyst at MF Global told MarketWatch. "The good news is we're not going to default, the bad news is we don't know what is coming out of Washington. There's a loss of confidence and a rethinking of the profit outlook going out a few years."

The trigger for last night's sharp declines was the first drop in consumer spending in two years. Purchases fell 0.2% after economists had predicted a 0.1% rise. Harvard economics professor Martin Feldstein said the odds that that the US will slide back into recession were now 50:50.

Risk assets including oil, equities, most industrial metals and the Australian dollar lost ground as money flowed into havens including gold, silver and the US dollar. The Aussie was recently down two cents at US$1.0782.

Precious metals enjoyed rapid gains. Gold for December delivery put on $41.60 or 2.6% at $1,663.30 an ounce after breaking US$1,660 an ounce for the first time. September silver added $1.57 or 4% at US$40.88 an ounce.

Oil dropped to its lowest level in five weeks as weak US spending and higher saving dimmed the demand outlook. Crude for September delivery was recently down $1.67 or 1.8% at US$93.20 a barrel.

Industrial metals mostly weakened but remained surprisingly resilient to the turmoil in equity markets. In London, copper was flat, aluminium lost 0.4%, tin 3% and zinc 0.8%. Lead added 0.2% and nickel 0.7%. US copper was recently off 0.8%.

The major European markets headed for 10-month lows amid renewed signs of stress in Italian and Spanish bond yields. Britain's FTSE fell 0.97%, Germany's DAX 2.26% and France's CAC 1.82%.

TRADING THEMES TODAY

NEW 2011 LOW: Another ugly day ahead. The bad news keeps flowing in the US and the bears are in full control. Nearly all the recent economic reports have been weaker than expected, suggesting a significant deceleration in an already sluggish economy. In addition, US investors fear that the new debt-ceiling bill will smother growth and constrain the prospects for corporate profits, now being reflected in lower share valuations. Unless there's a change in the economic outlook, this down-move could take a while to play out. Markets here and overseas look oversold and some sort of short-term relief is overdue, but I wouldn't bet on it lasting long. The trend for now is negative and the wise investor will adjust positions accordingly.

GOING FOR GOLD: Amid the carnage, gold looks better and better. There was a significant move overnight to a new record and that should see our goldies fare better than most today.

ECONOMIC NEWS: Another flurry of domestic reports is due today, including the Services Index at 9.30 am AEST and trade balance and retail sales at 11.30 am. This is a big night for the outlook in the US, where the ADP non-farm employment change report will offer an insight into Friday's crucial government jobs report. Also due tonight: year-on-year job cuts, the non-manufacturing PMI, factory orders and crude oil inventories.

Good luck to all.