daytrades may 5 pre-market

Morning traders.

Market wrap: Sharp falls in commodities and further losses on Wall Street have set up Australian shares to open at a six-week low.

The June SPI futures contract ended the night session 22 points or 0.47% weaker at 4703 as metals and oil tumbled following weak overnight US economic data.

The benchmark S&P 500 fell for a third night, dropping more than 1% before a partial afternoon recovery trimmed the loss to 0.69%. The Dow fell 84 points or 0.66% and the Nasdaq lost 0.47%.

Optimism about Friday's official US jobs report was dimmed by a private-sector report which pointed to lower job creation than expected. The ADP report showed the economy added 179,000 positions last month, below the 198,000 positions predicted by economists. A second report showed the services industry growing at the slowest rate in eight months.

"We haven't had strong employment growth yet," a money manager at Evercore Wealth Management in the US told Bloomberg. "It's still pretty tepid. We're hopeful that it will get some traction. That's important to really make this economic growth more sustainable."

The Shanghai Composite slumped 2.3% yesterday to its lowest level since February as investors continued to fret about government plans to rein in spending. The drop fed another steep pullback on industrial metals markets, with copper recording its biggest fall since early March and nickel and tin slumping more than 4%. In London, copper lost 2.6%, aluminium 1.7%, lead 2.5%, nickel 5.6%, tin 4.2% and zinc 2.15%. US copper was recently down 2.8%.

"The possibility of another RRR [reserve requirement ratio for banks] hike around the time of the release of April macroeconomic data on May 11 is a big overhang on the market, and we're also not writing off a possible rate hike too," an analyst from Central China Securities told the Wall Street Journal.

Silver extended this week's plunge to 20% with an overnight fall of more than 7% after reports that highly-regarded investor George Soros has been selling precious metals. Silver for July delivery was recently down $3.18 or 7.5% at US $39.39 an ounce. Gold for June delivery fell $24.20 or 1.6% to $1,516.20 an ounce.

Oil was hurt by soft overnight US economic data and a substantial rise in US inventories. Crude inventories increased by 3.4 million barrels last week, twice the gain analysts expected. Light sweet crude for June delivery dropped $2.24 or 2% to US $108.81 a barrel.

Falls in commodities fed further losses in the Australian dollar and miners listed overseas. The dollar was recently down 0.8%, buying US $1.0749. In US trade, BHP fell 2%, Rio Tinto 1.8% and Alumina 1.5%.

Mining stocks were hit particularly hard as European markets declined. Britain's FTSE lost 1.62%, Germany's DAX 1.69% and France's CAC 1.32%.

TRADING THEMES TODAY

COMMODITY SLIDE ACCELERATES: Presumably futures traders think our market pre-empted much of the overnight action yesterday because the figures make grim reading: Wall Street, Europe, China, BHP, Rio, oil, precious metals and industrial metals all finished lower, with China, Europe, silver, nickel and tin recording substantial falls. None of that bodes well for today. On the plus side, our dollar continues to pull back, which may eventually alleviate some of the currency concerns that have dominated local trade for the last two weeks. The sell-off in silver has been brutal but we must be close to a dead-cat bounce.

ECONOMIC NEWS: Monthly building approvals and retail sales are due at 11.30 am. The Nikkei remains closed for public holidays. Tonight's US schedule includes weekly unemployment claims, a speech by Federal Reserve chairman Ben Bernanke, preliminary non-farm productivity and unit labour costs, and natural gas storage.

Good luck to all.