daytrades august 9 pre-market

Morning traders. No relief in sight.

Market wrap: The horror run for Australian shares is set to continue at today's open after the worst session for US stocks since December 2008.

The September SPI futures contract ended the night session 153 points or 3.8% weaker at 3800 as US and European share markets plunged following S&P's downgrade of the US's credit rating. Oil collapsed to a nine-month low and key industrial metals erased this year's gains as traders abandoned risk assets for gold, US bonds and the Swiss franc.

The Dow shed 635 points or 5.55% to close below 11,000 for the first time since last October. The fall was the sixth worst in the index's history. The S&P 500 lost 6.66% to extend its three-day slump to 11% and the Nasdaq lost 6.9%. Small caps fared even worse, with an 8.9% fall sending the Russell 2000 Index into a bear market, 25% off its April high. Britain's FTSE lost 3.39%, Germany's DAX 5.02% and France's CAC 4.68%.

The S&P 500 financial sector fell more than 10% amid fears that the US's loss of its AAA credit rating will exacerbate a slowdown in the US economy and possibly tip it into recession. Losses accelerated after S&P reduced its credit ratings for several companies with a "direct reliance on the US government", including Fannie Mae and Freddie Mac. Bank of America fell more than 20% after being hit with a lawsuit over toxic mortgages.

Wall Street's fear gauge, the VIX, recorded its biggest surge since 2007, soaring 50% to its highest level since the last days of the GFC. High readings imply pessimism about the outlook for the market.

"There's no reason to get in front of this train," the chief investment officer at Fifth Third Asset Management in the US told MarketWatch. "Yes, there's cheapness in the stock market, but right now emotions are high. There's enough uncertainty out there. People are moving towards no risk. That includes Treasuries, which is ironic."

Gold was one of a slim handful of beneficiaries of a flight to safety, hitting a new record overnight. Gold for December delivery was recently ahead $69.50 or 4.2% at US$1,721.30 an ounce. Silver for September delivery put on 85 cents or 2.2% at US$39.06 an ounce.

Australian miners were pummelled in US trade as traders reassessed the outlook for the global economy. BHP tumbled 9.2%, Rio Tinto 11.4% and Alumina 11%.

Oil fell to its lowest level since November. Crude for September delivery was recently down $6.07 or 7% at US$80.81 a barrel.

Copper fell to its lowest level since May in London while zinc, nickel and tin wiped out this year's gains. London copper dropped 3.8%, aluminium 0.5%, lead 5.5%, nickel 5.1%, tin 6.5% and zinc 5%. US copper was recently off 4.7%.

TRADING THEMES TODAY

DEFENSIVE TRADING: Still no relief from the worst market collapse in three years. The themes remain the same: reduce your exposure where necessary, favour defensive sectors such as gold and silver over cyclicals and be wary of adding new overnight holds until there is light at the end of the tunnel. The further we fall, the bigger the relief rally but there are no signs yet that it's imminent. Once again there will be money to be made buying oversold liquid mid-caps/specs for intraday bounces but your timing has to be precise and your stop-loss discipline rock-solid. Let's hope Helicopter Ben has something positive to offer in tonight's FOMC statement.

PRAYING FOR CHINA: World markets could use some good news and today's best hope of a boost for our market lies with China. Our biggest trading partner is due to deliver its monthly economic update at noon AEST. Traders will pray that industrial production, retail sales and fixed asset investment remain strong and that recent signs of moderating growth haven't turned into something worse.

ECONOMIC NEWS: Business confidence and home loans are due at 11.30 am AEST, followed by the monthly Chinese economic update at noon (see above). Tonight's US schedule includes the Federal funds rate and FOMC statement, preliminary non-farm productivity and preliminary unit labour costs.

Good luck to all.