daytrading august 20 pre-market

Morning traders.

Market wrap:

Wall Street's first four-day losing streak this year and losses in key commodities have Australian shares pointing lower.

The September SPI 200 futures contract dropped 17 points or 0.3% to 5071 as the S&P 500 closed at its lowest level in five weeks and oil and metals retreated.

Another rise in borrowing costs overnight maintained pressure on US stocks amid concerns about the impact of higher rates on consumer and business activity. Bond yields hit a two-year peak ahead of tomorrow night's release of the minutes from the last Federal Reserve policy meeting.

The S&P 500 gave up early gains to close 10 points or 0.59% weaker at its low for the night. The Dow lost 70 points or 0.47% and the Nasdaq fell 0.38%. The Dow's loss marked its first four-day losing run in 158 sessions.

"This market has been on the weaker side in the last few weeks, digesting recent gains," the director of research at Penn Capital Management in the US told Bloomberg. "Most earnings are out now and there's not a catalyst to move stocks up or down."

With no major economic data released last night, traders continued to fret over whether the Federal Reserve will start to wind back its stimulus program at next month's policy meeting. The minutes from last month's meeting are due for release on Wednesday afternoon, US time.

Energy and financial shares led the falls as cyclical stocks dropped harder than defensives. The Morgan Stanley Cyclical Index lost 1.24% and the Russell 2000 index of small caps fell 1.08%. Rio Tinto gave up 1.59% and BHP 0.84%.

European shares added to the negative tone as the threat of political disruption in Italy fuelled a sharp downturn on the country's benchmark share index. The FTSE MIB sagged 2.46% after former Prime Minister Silvio Berlusconi threatened to bring down the fragile coalition government if he is expelled from the Senate after being found guilty of tax fraud. Germany's DAX lost 0.31%, France's CAC 0.97% and Britain's FTSE 0.52%.

The US energy sector fell 1.5% after oil snapped a six-session rally. West Texas Intermediate crude oil for September delivery was lately down 49 cents or 0.5% at US$106.97 a barrel.

Gold and silver gave back some of last week's big advance. Gold for December delivery dropped $5.50 or 0.4% to US$1,365.50 an ounce, trimming last week's 5% surge. Silver for September delivery, which last week spiked 14%, eased 16 cents or 0.7% to US$23.17 an ounce.

Copper pared a three-week advance as the cautious mood infected trade in industrial metals. US copper for September delivery was recently off nearly three cents or 0.9% at US$3.33 a pound. In London, copper lost 1.3%, aluminium 1.5%, lead less than 0.1%, nickel 1.2%, tin 0.3% and zinc 1%.

Iron ore improved for the first time in three sessions. Spot ore for import to China rose $1.30 or 1% to US$139.20 per dry metric tonne.

TRADING THEMES TODAY

WAITING FOR BHP: Markets hate a void and the absence of catalysts at the start of a slow week for economic data gave Wall Street no reason to rally last night. Fortunately, the ASX has been more independently minded over the last week as domestic earnings take the spotlight. The daddy of them all, BHP, is due to report full-year earnings today but I'm not sure if that happens during Australian market hours or after? Its market capitalisation alone is large enough to determine the market's direction today. Other heavyweights due to report today include ARI, CCL and QBE. Also due: ANN, CDD, CFX, CPA, HIL, IVC, MAH, MCP, MND, NAB, OSH, SHL, TGR. (Sources: Fairfax, BRR) Footnote: no one holding a spec share this morning will thank me for the observation, but there appears to be a growing disconnect between the frothiness among the speculative end of the market and the downturn in broader markets. The specs are generally slowest to join a rally and last to notice when the market mood changes. Enjoy the ride but don't forget to take profits.

ECONOMIC NEWS: The minutes from the last Reserve Bank meeting are due at 11.30am EST. A quiet 24 hours ahead offers no significant scheduled releases in Europe or the US.

Good luck to all.