Daytrading September 1 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

Stocks look likely to open under mild pressure after Wall Street ended its worst month in three years with another drop as Chinese growth and US rate hike worries endured last night.

The September SPI200 futures contract dipped 20 points or 0.4% to 5147 amid speculation that the ASX 200 pre-empted most of the overseas weakness during yesterday's 1.1% reversal.

The S&P 500 fell as much as 1.2% at last night's open before paring its final loss to 17 points or 0.84% as a surge in crude oil boosted energy stocks. The Dow gave up 115 points or 0.69% and the Nasdaq 52 points or 1.07%. Both the Dow and the S&P 500 lost more than 6% during August, the most volatile month in almost four years with five days when the indexes moved more than 2%.

A jittery market was further unsettled by weekend comments from US Federal Reserve Vice-chairman Stanley Fischer that suggested the central bank may press ahead with a rate increase this month despite last month's market volatility. The odds on a September rate increase had fallen sharply in the days prior to Fischer's remarks as signs of a slowdown in China sent the major US indices into technical corrections.

"August was a rough month for everybody,” Michael Block, chief equity strategist at Rhino Trading Partners in the US, told Bloomberg. “There’s a little scare now where people are getting this feeling from Fischer saying we could see a hike as soon as September, that they don’t care about volatility and that we’re on our own. You could argue a rate hike is good for stocks, but it’s a big unknown and the market is undecided, that’s where the fear is.”

Also weighing on sentiment was a Financial Times report on Sunday that the Chinese government has abandoned attempts to support the share market by buying stocks. Read more here. The report initially fuelled another heavy fall on the Shanghai Composite yesterday, but the index rebounded to reduce its loss to 0.82%.

Energy stocks helped Wall Street pare its initial fall, although the rebound faded before the final bell. West Texas Intermediate crude oil for October delivery surged $3.98 or 8.8% to US$49.20 a barrel to complete a three-day gain of 27.5% or more than US$10 a barrel. The rally, which started on Thursday with reports that Venezuela wants OPEC to hold an emergency meeting on reducing production, accelerated overnight after the oil cartel said it was open to discussing production cuts with other producers. Read more here. Also encouraging buyers was a report that US output declined 1.1% during June from the month before.

Australia's biggest miners resisted the downtrend in the US as iron ore continued to prove resilient to volatility in other commodities. BHP rose 0.38% and Rio Tinto 0.33% in US trade. Spot iron ore for import to China yesterday improved 20 cents to US$55.70 a dry ton.

Gold eased to its fifth loss in six sessions but ended August with its best monthly return since January. Gold for December delivery settled $1.50 or 0.1% lower at US$1,132.50 an ounce last night, 3.4% ahead for the month. The NYSE Arca Gold Bugs index declined 0.94%.   

Copper ended its worst run of monthly losses since the GFC with another retreat overnight. US copper for September delivery was recently off 0.4% at US$2.34 a pound. Copper has fallen for four straight months, the metal's worst run since 2008. Read more here. Trading on the London Metal Exchange was suspended for a public holiday.

Europe's benchmark index ended its worst month since 2011 with a moderate overnight loss. The Stoxx Europe 600 declined 0.13% on the last trading day of a month when it fell 8.5%. Last night Germany's DAX eased 0.38% and France's CAC 0.47%. Britain's FTSE was closed for a bank holiday.

The dollar was this morning buying 71.15 US cents.

TRADING THEMES TODAY

RATE OUTLOOK + CHINESE MANUFACTURING = VOLATILITY: We're heading into an interesting session, with plenty of potential intraday mood-changers. China is due to provide factory updates at 11am (government version) and 11.45am (private measure), then the RBA will issue rates guidance at 2.30pm. While there is no suggestion that the Reserve Bank will cut the cash rate this afternoon, its guidance should provide a clue as to how seriously the bank is treating recent signs of weakness in China. Any hint that cuts are back on the table will encourage stock buying. As for China, expectations are low. The official manufacturing PMI is expected to turn negative for the first time since a brief dip in February.

ECONOMIC NEWS: A busy day for domestic news includes the AIG Manufacturing Index at 9.30am EST, monthly building approvals and quarterly current account data at 11.30am and a Reserve Bank rate decision and policy statement at 2.30pm. However, the biggest intraday market-mover is likely to be the Chinese government August manufacturing report at 11am, which is followed by a rival private gauge at 11.45am. Tonight's US highlights include rival manufacturing reports, manufacturing prices, construction spending and vehicle sales.

Good luck to all.