Daytrading October 21 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

The share market's soft run looks set to continue today after company earnings disappointments kept Wall Street in check overnight.

The December SPI200 futures contract slipped 12 points or 0.2% to 5201 as US stocks faded to minor losses following poorly-received quarterly updates from IBM, Harley-Davidson and Lockheed-Martin.

The S&P 500 traded either side of break-even before closing with a loss of three points or 0.14%. The Dow gave up 13 points or 0.08% as a strong result from United Technologies partly offset IBM's dive. Renewed weakness in biotechs helped push the Nasdaq down 24.5 points or 0.5%.

The benchmark US index has rebounded nearly 9% from its August low, but the rally has lost momentum over the last two weeks as the third-quarter corporate earnings season confirmed the impact of a strengthening US dollar on earnings. While most companies have met profit targets, revenues have been falling short. Shares in IBM dropped 5.73% overnight after the tech giant announced revenue declined for a 14th straight quarter. Harley-Davidson sagged 13.92% and Lockheed-Martin 0.89%. UTS jumped 3.97% and Travelers 2.47%.

"IBM is a reflection of what's going on [with earnings] across the board," Nick Raich, CEO of The Earnings Scout in the US, told CNBC. "It's not a good start to earnings season."

Traders continued to be wary of any economic data that might encourage the Federal Reserve to raise rates. Overnight data showed work began on more than dwellings than economists expected last month. Housing starts jumped 6.5% to a seasonally-adjusted annual pace of 1.21 million units from 1.13 million in August. Economists hjad expected a more modest increase to an annual rate of 1.15 million. Read more here.

“The reporting season in the US has got off to a poor start, and to make matters worse the strong economic data adds weight to the argument that the Fed will hike rates this year,” David Madden, market analyst at IG in the US, told MarketWatch.

A 3.16% decline in the iShares Nasdaq Biotechnology Index was the biggest weight on the Nasdaq. Health care was the worst of the ten S&P 500 industry groups, telecoms the best.

BHP shed 0.82% to dip back below its 50-day moving average in the US for the first time in two weeks. Rio Tinto gave up 0.77%. Spot iron ore for import to China yesterday dropped 40 cents to US$52.10 a dry ton.

US energy stocks bucked the general downtrend despite more downward pressure on the price of crude. The US energy ETF edged up 0.28%. West Texas Intermediate crude oil for November delivery settled 34 cents or 0.7% weaker at US$45.55 a barrel.

Gold stocks pared three sessions of losses as the precious metal reversed some of Monday's fall. The NYSE Arca Gold Bugs index jumped 4.43%. Gold for December delivery settled $4.70 or 0.4% ahead at US$1,177.50 an ounce.
  
A downbeat session on the London Metal Exchange saw most industrial metals extend declines triggered by weak Chinese industrial production figures on Monday. London copper lost 0.1%, aluminium 0.3%, lead 0.6% and zinc 1.5%. Nickel and tin both put on 0.2%. US copper for December delivery was recently down less than 0.1% at US$2.37 a pound.

Weakness in resource stocks helped pull Europe's benchmark index back from Monday night's six-week peak. The Stoxx Europe 600 gave up 0.43%, Germany's DAX 0.16%, France's CAC 0.64% and Britain's FTSE 0.11%.

The dollar was this morning buying 72.64 US cents.

TRADING THEMES TODAY

DRIFT TO CONTINUE: The big global recovery from the September lows has temporarily run out of puff this week, but there is no real cause for worry while indices loiter near their rebound highs. While the latest US earnings season is not providing a catalyst for higher levels, there is no significant downward pressure, either, for all the gloomy talk about revenue misses. Of course, we may reach a tipping point when the trend is too obvious to ignore, but we're not there yet. Gold stocks had a good session, biotechs a bad one.

ECONOMIC NEWS: Rival leading indexes of economic activity are due at 10am EST and 10.30am. Crude oil inventories are the highlight of a light night ahead for scheduled economic data in the US.

Good luck to all.