daytrades july 16 pre-market

Morning traders.

Market wrap: Local shares face another negative start despite a late recovery on Wall Street as traders bet on good news for BP and Goldman Sachs.

The September SPI futures contract closed 8 points lower at 4425 this morning after losses for the big miners on overseas bourses and modest falls in key commodity prices.

Wall Street was underwater for most of the night but rallied late in the session to finish mixed after reports that BP has plugged the oil leak in the Gulf of Mexico and Goldman Sachs has settled fraud charges with U.S. regulators. The news helped the Dow trim a 120-point loss to just 7 points or -0.07% by the closing bell. The Nasdaq closed -0.03% lower and the S&P 500 gained 0.12%.

The major indexes lost ground in early trade after another weak round of local economic reports. Regional manufacturing reports from Philadelphia and New York showed slowing growth this month, creating another headwind for corporate profits. Claims for jobless benefits fell last week, but analysts pointed to seasonal factors.

"The economic numbers continue to paint an ugly picture of growth," a fixed-income analyst in the U.S. told MarketWatch.

The late recovery came after BP announced oil had stopped flowing from a leaking well in the Gulf of Mexico during testing of a new "containment cap" placed over the weekend, and the Securities and Exchange Commission announced that it would make a "significant announcement" after the closing bell. The SEC has since announced that Goldman Sachs will pay US$550 million to settle fraud charges. BP shares rallied 7.5% and Goldman Sachs 4.5%.

Also helping sentiment was news that President Obama's sweeping financial regulation bill had cleared the Senate and is likely to be signed into law next week.

"The finalisation of financial reform and the Goldman speculation turned things around because they bring clarity and it means we can finally get back to the business of banks making money," a U.S. money manager told Bloomberg. "The BP news is helpful too because it looks like we might get resolution on that issue as well, but the market is moving on headlines and it can make you seasick."

Further falls for the U.S. dollar did little to support commodity prices. The dollar index, which tracks the greenback against six major currencies, was recently down 1.3% to its lowest level since early May.

Crude oil futures pared early losses but were recently off 17 cents or 0.2% at $76.88 a barrel. Gold continued to track sideways. The spot price was recently flat at $1,208.50 an ounce.

Industrial metals were mostly lower despite the weaker dollar and yesterday's generally supportive economic reports from China. In late trade in London, copper was off 1.3%, lead 2%, nickel 0.4%, tin 0.4% and zinc 1.6%.

The major European markets closed with significant losses after the weak U.S. economic reports. Britain's FTSE lost 0.8%, Germany's DAX 0.97% and France's CAC 1.41%.

TRADING THEMES TODAY

SAVED BY BP AND GOLDMAN: A poor night on Wall Street was rescued late in the session by an oil plug and Wall Street's "largest ever" fraud settlement. It's good to see salves for two long-running sores, but arguably of greater import was continuing evidence of slowing growth in the U.S. Manufacturing has been the bright spot in a bleak U.S. economic landscape but last night's reports suggest it, too, is weakening. The headwinds are building.

FRIDAY FADE: The traditional end-of-week sell-off has been less marked of late, but the urge to lock in profits after a nice bounce over the last week and a half may be too strong today. Trading habits vary but I'm generally wary of buying after lunch on Fridays unless U.S. futures point to a strong session.

ECONOMIC NEWS: Nothing scheduled locally today but another heavy slate of economic reports will test the American appetite for risk tonight. The menu includes consumer sentiment, the consumer price index, long-term securities purchases and inflation expectations.

Good luck to all.