Day trading pre-market open August 5

Originally posted by highlandlad ↑

Morning traders. Thanks loungers, especially @Ravgnome and @Patterns.

Outlook for the day: The Australian market faces a second day of heavy selling as recession fears continue to pummel Wall Street.

ASX futures: down 115 points or 1.46%

Friday themes:

US stocks tumbled for a second session after weak jobs growth stoked fears that the Federal Reserve has left it too late to start cutting interest rates.

The Dow plunged almost 1,000 points before paring its fall to 611 points or 1.51%. The S&P 500 lost 1.84%.

The Nasdaq Composite slumped into technical correction territory as a decline of 2.43% on Friday extended its retreat from its peak to more than 10%.

The odds on a double-sized 50-point rate cut in September jumped to 69.5% after a report showed non-farm payrolls increased by just 114,000 last month, down from 179,000 in June and well below the 185,000 forecast by economists. The increase was also shy of the 200,000 growth needed to absorb population growth. The jobless rate rose to a three-year high of 4.3%.

"The Fed is going to cut and we're all sort of adjusted to that, that is sort of established. Now it's more like hey, did they wait too long? Do we have a recession on our hands?" - Lamar Villere, portfolio manager at Villere & Co (per Reuters).

The selling was exacerbated by earnings misses from Amazon and Intel. Amazon shed 8.79% after warning sales slowed last quarter and customers were becoming more cost-conscious. Intel lost a quarter of its market value after suspending its dividend, slashing jobs and forecasting revenue below forecasts.

A flight to safety boosted bond markets, driving yields to their lowest since December. Rate-sensitive real estate and utility stocks attracted haven flows. Consumer staples also resisted the selling, gaining 0.86%.

The hardest-hit S&P sectors were consumer discretionary (Amazon) -4.61%, financials -2.42% and energy -2.29%. Industrials, tech and mining all lost at least 1.8%.

Wall Street is moving towards a seasonally-volatile time of year, according to Reuters. Historically, volatility increases during the northern summer, peaking in October.

"This isn't an unusual seasonality pattern. We had a similar selloff in August 2023, although perhaps this is more forceful" - James St. Aubin, chief investment officer at Ocean Park Asset Management (per Reuters).

The S&P 500 ended the week 5.7% below its former high. The Dow was down 3.9%.

Oil fell a seven-week as Friday's fall sealed a fourth straight weekly loss. Brent crude dropped 3.4% on the day and 4.3% for the week as fears of wider conflict in the Middle East failed to offset doubts about economic growth in China and the US.

"Demand risks related to a looming recession are much more significant than the threat to supply that the current geopolitical landscape presents which leaves the fundamental scales tipped in favor of the bears right now” - Tyler Richey, co-editor of Sevens Report Research (per MarketWatch).

Gold set a new intraday record before settling modestly lower. Metal for December delivery settled US$11 or 0.4% weaker at US$2,469.80 an ounce after trading as high as US$2,522.20. The retreat trimmed the yellow metal's gain for the week to 3.7%.

US uranium miners fell heavily for a second session, implying more pain for their Australian counterparts after Friday's bloodbath. The Global X Uranium ETF slumped 6.23% to an 11-month low. Spot uranium declined 2.76% as prices continued to respond to the prospect of more supply after the world's largest producer upgraded its production guidance.

Iron ore rebounded at the end of a losing week after portside ore inventories declined in China for the first time in six weeks. Inventories at 45 major ports declined 1.2% week-on-week, according to Mysteel. Benchmark ore bounced 2.19% on the Dalian Commodity Exchange. Copper and nickel also rose on the London Metal Exchange.

The week ahead brings a Reserve Bank rates decision (Tuesday), a speech by RBA Governor Bullock (Thursday) and trading updates from a handful of US heavyweights, including Caterpillar and Disney.

Key events this week:

Inflation gauge - 11 am AEST

China services PMI - 11.45 am

US services PMI - tonight

RBA rates decision - Tuesday

Job ads - Tuesday

Speech by RBA Governor Michele Bullock - Thursday

China inflation data - Friday

S&P 500: down 100 points or 1.84%

Dow: down 611 points or 1.51%

Nasdaq: down 418 points or 2.43%

Dollar: up 0.14% to 65.15 US cents

Iron ore (Dalian): up 2.19% to US$108.09

Brent crude: down US$2.71 or 3.4% to US$76.81

Gold: down US$11 or 0.4% to US$2,469.80

Silver: down 9 US cents or 0.3% to US$28.39

NYSE Arca Gold Bugs: down 2.48%

Bitcoin: down 2.35% to US$58,948

Copper (LME): up 0.38% to US$9,087

Nickel (LME): up 0.99% to US$16,350

Lithium carbonate (China futures): down 1.1% to US$11,150

Global X Lithium & Battery Tech ETF: down 1.74% (4-year low)

Uranium (spot): down 2.76% to US$82.75

BHP: down 0.46% (US); down 1.5% (UK)

Rio Tinto: up 0.28% (US); down 1.09% (UK)

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Everything looks grim from a macro perspective. I suspect a significant market correction is imminent.