daytrades august 11 pre-market

Morning traders.

Market wrap: A cautiously positive start to local trade is likely after a Federal Reserve move to pump the U.S. economy dragged Wall Street back from heavy overnight losses.

The September SPI futures contract this morning closed 4 points stronger at 4511, pointing to a modest rebound at today's opening bell from yesterday's China-inspired tumble.

Regional markets skidded lower yesterday after softening Chinese imports yesterday raised fears that consumption in the Asian powerhouse was flagging. Wall Street opened deep in the red, but pared losses after the Fed announced it will stimulate the stumbling economy by buying government debt.

The news helped a 140-point drop on the Dow ease to a 55-point or 0.51% loss. The broader S&P 500 closed 0.6% weaker and the Nasdaq lost 1.24% as tech shares were hit by questions over demand.

In its monthly statement, the Federal Open Market Committee admitted the U.S. economy needed help, and said it will direct proceeds from maturing investments in mortgage-backed securities into Treasury bonds. The statement said: "The pace of economic recovery is likely to be more modest in the near term than had been anticipated."

"They're signalling to the market that their foot is firmly on the accelerator and that they're ready to put a backstop to prevent a double-dip [recession]," a chief investment officer in the U.S. told Bloomberg. "It's a symbolic reassurance to the market."

Chinese shares fell 2.9% yesterday, their worst fall in a month, after July economic data showed a slowdown in demand for imported goods and services. Although imports rose for the ninth straight month, the 22.7% rise was well beneath the 30.2% increase forecast by economists.

The imports news raised demand concerns for commodities, which combined with a recovering U.S. dollar to send oil and industrial metals lower. Crude oil futures slipped under $80 a barrel but partly-recovered after the Fed statement to trade recently at $80.28 a barrel, down $1.22 or 1.5%.

Industrial metals were sold off ahead of more Chinese economic data later today, but copper pared its loss in New York as U.S. equities recovered to close 1.1% weaker. In London, copper fell 1.3%, aluminium 0.5%, lead 3.2%, nickel 2.6%, tin 0.2% and zinc 2.8%.

Gold rallied after the Fed statement. The spot price shook off early weakness to trade recently $2.40 higher than Monday's New York close at $1,203.60 an ounce.

The major European markets closed lower ahead of the Fed news as mining stocks were hit by the Chinese report. Britain's FTSE fell 0.63%, Germany's DAX 1.03% and France's CAC 1.24%.

TRADING THEMES TODAY

ALL EYES ON CHINA: The negative reaction to yesterday's softening Chinese imports will ensure today's monthly Chinese economic reports are analysed even more closely than usual. The bulk of the remaining reports are due to be released at noon. Today's data includes the consumer price index, producer price index, industrial production, retail sales and new loans. Nerves over what the data may contain are likely to restrain any moves on our market until the data is released.

TOPPING OUT?: Last night's action in the U.S. repeated the recent trend of a sell-off followed by a recovery. However, Wall Street has been unable to make any headway in the last week and that may be a sign that we're due a pull-back after a month-long rally. Our market bounced off resistance yesterday on the highest volume in a month and that may be a clue that investors are ready to take profits.

ECONOMIC NEWS: The monthly local consumer sentiment report is due at 10.30 am, but today's main interest is the monthly Chinese reports at 12.00 pm (see above). Tonight's reports in the U.S. include the trade balance, crude oil inventories and the Federal Budget Balance.

Good luck to all