Daytrading Aug 29 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

Shares are likely to open under mild pressure after iron ore plumbed a fresh two-year low and US stocks retreated as fighting in Ukraine intensified and bright economic data strengthened the argument for interest rate rises.

The September SPI 200 futures contract slipped five points or 0.1% to 5604 as BHP and Rio Tinto lost ground in US trade.

The S&P 500 fell 0.5% in early trade before paring its final loss to three points or 0.16%, ending a three-session rally and closing below 2,000 at 1,996.9 . The Dow and Nasdaq both lost 0.25% after Ukraine said Russia had moved more troops inside its borders and strong GDP, jobless claims and housing data intensified pressure on the Federal Reserve to raise rates to temper an accelerating US economy. Trading volumes were the lowest of the year ahead of the Labor Day long weekend.

Geopolitical tensions dampened risk appetite after the Ukrainian government accused Russia of invading eastern Ukraine and capturing the coastal town of Novoazovsk. NATO said around 1,000 Russian troops were fighting alongside rebels on the Ukraine-Russia border. Read more here.

The reports helped push European stocks lower for the first time in four sessions. The Stoxx Europe 600 index fell 0.66% as Germany's DAX shed 1.12%, France's CAC 0.67% and Britain's FTSE 0.36%.

The potential for rate rises in the US next year occupied minds after second-quarter US growth was revised upwards to 4.2% from a seasonally-adjusted initial reading of 4%. Economists had expected growth to be revised downwards.  
Initial claims for jobless benefits declined by 1,000 last week to 298,000, near an eight-year low. An index of pending house sales improved by 3.3% last month to its highest level in 11 months.

"We need to get off a zero-rate policy as soon as possible,” Doug Coté, chief market strategist at Voya Investment Management in the US, told MarketWatch, describing the current rate setting as "dangerous".

Australia's largest miners saw solid falls in US trade after the price of iron ore fell to within 60 cents of the 2012 low. BHP lost 2.01% and Rio Tinto 3.59%. Spot iron ore for import to China yesterday declined for a ninth straight session, dropping 90 cents to US$87.30 a dry tonne. Read more here.

Gold stocks rallied for a third session in the US as the conflict in Ukraine encouraged haven buying. The NYSE Arca Gold Bugs Index advanced 1.14%. Gold for December delivery rose $6.80 or 0.5% to settle at US$1,288.70 an ounce and was recently trading at US$1,290.

Oil reached its strongest level this week as Russia's reported incursion into Ukraine resurrected the prospect of sanctions on Russian energy supplies. West Texas Intermediate crude oil for delivery in October advanced 67 cents or 0.7% to settle at US$94.55 a barrel and was lately at US$94.57.  

Most base metals retreated as Ukraine-Russia tensions compounded weak data from Europe, where economic sentiment fell to an eight-month low and inflation data came in weaker than expected. In London, copper declined 1.3%, nickel 1.1%, aluminium 0.3%, lead 0.7% and zinc 0.8%. Tin edged up 0.2%. US copper for September delivery was recently off 1.6% or five cents at US$3.15 a pound.

The dollar was this morning little changed, buying 93.61 US cents.

TRADING THEMES TODAY

CAUTION: Safety-first US traders were likely looking for an excuse to trim positions so they will sleep easier over the long weekend and found one in their old friend Vladimir Putin, who can be relied upon this year when the market needs a reason to retrace. The case for zero interest rates in the US looks increasingly flimsy in the light of the recent economic acceleration and may provide another excuse for a pullback. With US markets closed on Monday, we can likely expect low volumes here and on Wall Street until Tuesday. Iron ore is at the point where it either puts in a double-bottom - hooray - or plunges through support. We will likely know one way or the other by the end of next week. Goldies continued to improve in the US overnight.   

ECONOMIC NEWS: Monthly private-sector credit data is due at 11.30am EST. The US signs off before the Labor Day weekend with the Chicago PMI, revised consumer sentiment and inflation expectations, core price index and personal spending and income.

Good luck to all.