Market wrap: Stocks look set to hand back yesterday's gains plus some more after a second night of falls in overseas markets and key resources.
American investors continued to reduce their exposure ahead of tonight's Federal Reserve interest rate policy announcement. The S&P 500 slipped back under the psychologically significant 1000 mark, down 1.27% to 994. The Dow lost 1.03% and the Nasdaq was down 1.13% after European markets ignored a positive lead from Asia and retreated for a second day.
There were heavy falls for US financials, with the S&P Bank Index dropping 5%. REITs were also well in the red at -2.88%. Oilers gave up some recent gains after the price of crude dipped on over-supply concerns. Crude futures fell 1.63% to recently trade at $69.36. Gold chopped around but was recently trading virtually unchanged at $945.50.
The gentle retreat in base metals prices continued after signs of a slackening in Chinese buying. In London, copper fell 1.47%, aluminium 1.67%, lead 3.9%, nickel 2.98%, tin 0.68% and zinc 1.62%. China also reported below-forecast growth in factory output and investment.
Futures traders expect a big red open on our market. With 30 minutes left to trade, the SPI was down 37 points at 4273.
TRADING THEMES TODAY
PLAYING CATCH-UP: Regional markets yesterday ignored cues from the rest of the world and rallied when the US and Europe were signalling a retreat. Oops. That points to significant falls today as the ASX tries to get back in step with overseas markets.
BOUNCE TRADES: Breakouts are likely to be at a premium in today's conditions, so my pre-market analysis will concentrate on looking for shares in uptrends that have been pulling back for a day or two and are likely to drop to support levels during the opening-hour sell-off. These are good bounce candidates - but keep stop losses tight.
ROTATION: As per yesterday, we're likely to see some rotation out of cyclicals into safer defensive sectors - utilities, health care, consumer staples and telecoms.
