daytrading dec 10 pre-market

Morning traders.

Market wrap:

Shares are likely to open near yesterday's three-month closing low after US stocks inched higher despite signs that the Federal Reserve is preparing to cut stimulus spending.

The December SPI 200 futures contract retreated two points or less than 0.1% to 5141 as risk appetite remained muted after the Australian share market yesterday ignored positive leads following its worst week since June.

The S&P 500 edged up three points or 0.16% to a new record close in what some analysts interpreted as a signal that the market is ready for the so-called Fed taper. The Dow gained six points or 0.04% and the Nasdaq added 0.16%.

The session was dominated by speeches by Fed officials that suggested the central bank could reduce its US85 billion a month stimulus spending as early as next week. Fed Bank of Dallas President Richard Fisher said the bank should begin tapering "at the earliest opportunity". Fed Bank of St Louis President James Bullard said the odds on a taper have risen and a small reduction this month would reflect the improved job market. Jeffrey Lacker, president of the Richmond Fed, said stimulus cuts will be on the table at next week's monthly policy meeting.

"People are getting more comfortable with the idea of tapering and the concept that the reason for the taper is that the economy is getting stronger," Walter Todd, chief investment officer of Greenwood Capital Associates in the US, told Bloomberg. "At the end of the day that's a good thing not a bad thing. For the next week it's just going to be speculation around the timing."

Australia's big two miners closed mixed despite materials leading the sectors gains along with industrials and financials. The Russell 2000 index of small caps lost 0.41%. BHP lost 0.25% in US trade, while Rio Tinto added 0.07%. Spot iron ore for import to China yesterday improved 20 cents to US$139.40 a tonne.

Gold stocks rallied as the metal pared last week's losses. The Gold Bugs Index put on 2.16%. Gold for February delivery was lately up $10.90 or 0.9% at US$1,239.90 after earlier settling at US$1,234.60 an ounce.

Nickel led a recovery in base metals in London following upbeat Chinese trade figures released over the weekend. Nickel rallied 1.4% to its highest level in a month ahead of a ban on exports from top producer Indonesia due to start next month. In other London action, copper gained 0.1%, aluminium 0.8%, lead 0.8%, tin 0.4% and zinc 0.7%. US copper for March delivery was recently up about a cent or 0.3% at US$3.26 a pound.

Oil saw some profit taking following last week's 5.3% surge. West Texas Intermediate crude for January delivery was recently off 28 cents or 0.3% at US$97.37 a barrel.

The major European markets overlooked an unexpected decline in German industrial production, focussing instead on increased Chinese exports and imports. Germany's DAX gained 0.25% and France's CAC and Britain's FTSE both put on 0.11%.

TRADING THEMES TODAY

SEARCHING FOR A BOTTOM: Our futures represent understandable concern over Australia's recent under-performance relative to the rest of the world. Lately bullishness has been punished. The US is at an all-time high, Europe saw a decent a pullback but seems to be in repair, while Asian markets look fine. Meanwhile we're at a three-month low. My guess is that US institutions are preparing for the taper (ie, having less loose cash) by cutting investments in countries where the outlook seems least promising. With Glenn Stevens talking down the dollar and economic data fairly tepid, there is little incentive for foreign money to stay invested here. Yesterday's "failure to bounce" off obvious horizontal support was troubling. Long-term, this level may turn out to be a good investment opportunity. Short-term? Hmmm...

ECONOMIC NEWS: Business confidence and home loan figures are due at 11.30am EST. China releases industrial production, retail sales and fixed asset investment data at 4.30pm. ECB President Mario Draghi is due to deliver a speech tonight in Italy. A light week for US data continues with wholesale inventories, job openings and a small business index.

Good luck to all.