Morning traders.Market wrap: Australian stocks are likely to...

Morning traders.

Market wrap: Australian stocks are likely to open lower for the first day in six after a weak night on Wall Street and declines in key commodities.

The December SPI futures contract ended the night session 13 points or 0.27% lower at 4757 as U.S. equities were crimped by a rising U.S. dollar, worries over increasing borrowing costs for companies and the threat of a downgrade for Spanish sovereign debt.

Early strength on Wall Street following solid economic reports gave way to modest falls. The benchmark S&P 500 closed 0.51% lower, ending a six-day winning run, the Nasdaq fell 0.4% and the Dow outperformed both with a fall of just 19 points or 0.17%.

Market commentators said a dramatic surge in bond yields since the Federal Reserve outlined plans to stimulate the economy had negative implications for equities because companies faced higher interest rates on borrowings.

"Stock investors are focused on the bond market," the chief investment officer at First Citizens Bancshares in the U.S. told Bloomberg. "People are concerned about higher borrowing costs even as the Fed tries to keep interest rates low. There's also heightened concern about Europe."

European markets declined after ratings agency Moody's warned that Spain's credit rating may be cut as it struggles to refinance its debt. Britain's FTSE dropped 0.15%, Germany's DAX 0.16% and France's CAC 0.58%. The news drove down the euro and added fuel to a rally in the U.S. dollar that was already underway following a solid consumer spending report. The dollar index, which measures the greenback against a basket of currencies, was recently up 1%.

Australian miners listed in the U.S. mostly weakened as the rising greenback made dollar-denominated commodities more expensive for holders of other currencies. BHP fell 1.9% and Rio Tinto 2%, but Alumina was 4.3% stronger.

Gold for February delivery fell $22.20 or 1.6% to $1,382 an ounce. Most base metals also eased. In late trade in London, copper was off 1.1%, aluminium 1.1%, lead 1.6%, tin 1.7% and zinc 2.4%. Nickel was ahead 0.2%.

Oil was a notable exception to the downdraught in raw materials, boosted by a surprisingly steep fall in the weekly U.S. inventory report. U.S. crude oil inventories slumped 9.9 million barrels last week, more than three times the fall predicted by analysts. Crude futures were recently up 20 cents or 0.23% at $88.48 a barrel.

TRADING THEMES TODAY

PULLBACK BEGINS?: Markets look to be due a breather after two weeks of steady gains. The ASX 200 has put on 183 points since December 1, with just one down-day of any substance along the way. That's one of the best runs this year. I'm broadly bullish about the next few months but a short-term pullback looks overdue. Our futures seem a little too relaxed this morning and may look over-optimistic by day's end.

ECONOMIC NEWS: Monthly consumer inflation expectations are due at 11 am and the quarterly RBA Bulletin is due at 11.30. This week's heavy pre-Christmas holiday schedule in the U.S. continues tonight with weekly jobless claims, monthly building permits, regional manufacturing, housing starts, the current account and natural gas storage.

Good luck to all.