daytrades feb 24 pre-market

Morning traders.

Market wrap: The share market will open weaker for a fifth day after US stocks recorded their biggest two-day slump in six months.

The March SPI futures contract ended the night session 23 points or 0.5% softer at 4806 but off its low as the price of oil retreated from an overnight high of US$100 and Wall Street moderated heavy falls.

The Dow recorded a second straight triple-digit decline for the first time in eight months, falling 107 points or 0.88%. The S&P 500 touched 1,300 before closing 0.61% weaker at 1,307. The Nasdaq lost 1.21% as computer-maker Hewlett-Packard dropped nearly 10% after lowering profit expectations for this quarter.

Attention remained focussed on civil unrest in the Middle East which has fuelled a rally in oil that peaked overnight at US$100 a barrel before easing to $98.42, up $3 or 3.1% for the session. Gun battles continued in Tripoli overnight amid reports of army units abandoning Libyan dictator Muammar Qaddafi. Wall Street's fear gauge, the VIX or Volatility Index, rose to its highest level since late November but fell back as equities rebounded.

"People are always looking forward and that's why they are reacting negatively to the spike in oil prices," the chairman of Holland & Co in the US told Bloomberg. "Higher crude prices may challenge the outlook for economic growth. So, even as we have better-than-estimated earnings and economic figures in the US, those are sort of looking at the rear-view mirror."

Energy and precious metals stocks were among the few rising sectors in the US as companies most exposed to the rising oil price were sold off for a second night. An index of airlines fell 3.1%, transport stocks 2% and industrials 1.5%. The Australian miners were mixed in US trade: BHP rallied 0.3% but Rio Tinto fell 1.2% and Alumina 0.8%.

Precious metals continued to find favour as a traditional safe home in times of geopolitical strife. Silver notched a fresh 31-year high and gold recorded its best price in seven weeks. March silver rallied 64 cents or 2% to $33.51 an ounce. Gold for February delivery was recently up $12 or 0.9% at $1,413 an ounce.

Copper fell to its lowest level in a month as traders factored inflationary pressures from the oil spike into the economic outlook. In London, copper eased another 1.2%, lead 1.05%, nickel 0.5% and tin 0.7%. Aluminium added 0.1% and and zinc 0.2%. US copper was recently down 0.7% and rebounding from a low of -1.6%.

"This is not a metal-specific or fundamental-specific move," Barclays Capital analyst Gayle Berry told Reuters. "I do feel that this is very much sentiment-driven. Concerns have been building with regards to the geopolitical situation in north Africa and the Middle East, which could have an impact on global economic growth. This is really shaking the market."

The major European markets declined for a fourth night. Britain's FTSE fell 1.22%, Germany's DAX 1.69% and France's CAC 0.92%.

TRADING THEMES TODAY

CORRECTION CONTINUES: There were some hopeful signs for the bulls with a modest afternoon rebound on Wall Street but unfortunately it fell well short of a reversal signal. The S&P 500 respected the psychologically significant 1,300 mark but couldn't go on with the bounce. So the themes for today appear to be a diluted version of yesterday: overall market weak, strength in oil and precious metals, be wary of anything exposed to the oil price (airlines, transport, industrials), keep a close eye on liquidity in your small caps.

ECONOMIC NEWS: Two important gauges of the outlook for the local economy are due this morning: firstly, the monthly leading index of economic indicators at 10 am, then quarterly private capital expenditure figures at 11.30 am. A heavy schedule in the US tonight includes unemployment claims, durable goods orders and core durable goods, new home sales, the house price index, crude oil inventories and natural gas storage.

Good luck to all.