Morning traders.
Market wrap: Shares are likely to open around 1% weaker this morning following the worst session on the US's benchmark index in two months.
The March SPI futures contract fell 49 points or 1.01% overnight to 4781 as key commodity prices retreated and Australian miners were sold down in overseas trade.
Poorly-received earnings reports from Goldman Sachs, Wells Fargo and American Express and a soft housing report helped start a day-long slide in the S&P 500, which closed 1.01% lower. The Dow was cushioned by a 3.4% rise in IBM but the blue chips still fell 13 points or 0.11%. The Nasdaq fared worst, tumbling 1.46%. The VIX or volatility index - sometimes called Wall Street's "fear index" - jumped more than 11%.
"We got a couple of disappointing news coming out of financial companies," the chief investment officer at Philadelphia Trust in the U.S. told Bloomberg. "Housing numbers were moderately dismal. Nobody is throwing in the towel yet, but don't forget stocks have had a pretty sharp run-up and might be due for a pause or pullback."
Financial shares were the biggest weight on the major indexes after Goldman Sachs reported a 53% fall in earnings last quarter. Wells Fargo's revenue declined and AmEx missed earnings expectations.
Housing starts fell by 4.3% last month, more than analysts expected. The news helped fuel another drop in the U.S. dollar, but the 0.5% drop in the dollar index did little to support commodity prices. In U.S. trade, BHP fell 1.1%, Rio Tinto 2.1% and Alumina 2.1%.
Oil retreated ahead of tonight's weekly U.S. stockpile report, delayed a day because of Monday's public holiday. Crude futures traded as high as $92.11 before the slide in equities dragged them down 54 cents or 0.6% for the session to $90.84 a barrel.
Copper briefly hit a record high in London, then turned south after the weak U.S. housing report and fall in equities. In London, copper fell 1.2%, aluminium 0.6%, lead 3.3%, nickel 1.5%, tin 0.4% and zinc 1.7%.
Silver fell 23 cents or 0.8% but gold was little changed. Gold for February delivery was recently up 30 cents or 0.02% at $1,369 an ounce.
Losses in Europe accelerated into the close as U.S. indexes skidded in early trade. Britain's FTSE fell 1.32%, Germany's DAX 0.85% and France's CAC 0.9%.
TRADING THEMES TODAY
FASTEN SEATBELTS: The S&P 500's smooth ascent hit turbulence overnight as the U.S. earnings season delivered its first significant disappointments. Global equity markets are well overdue for a pullback and last night found a reason. Earnings season is always choppy and last night's drop could easily be reversed by good news tonight. However, with markets at elevated levels, further weakness is likely in the days/weeks ahead and smart traders will take measures to safeguard their profits. The jump in the VIX suggests trading could be trickier in the weeks ahead.
CHINA UPDATE: Lunchtime today brings the monthly economic update from our most important trading partner. News leaked yesterday that central bank efforts to rein in inflation are having an effect - the consumer price index is claimed to have eased from 5.1% in November to 4.6% last month. GDP allegedly rose to 10.3%, which if true is stronger than economists expected. Read more here. The official announcement at 1pm today will also include industrial production, retail sales and the producer price index. Our market appeared to factor in the good news yesterday, but confirmation may help sentiment in the second half of the session.
ECONOMIC NEWS: Monthly inflation expectations data are due at 10.30 am today, but the main local interest lies in the monthly China economic bulletin due at 1pm (see above). The key reports tonight in the U.S. are existing home sales, weekly unemployment claims and a regional manufacturing index. Also due: crude oil inventories, natural gas storage and the leading index.
Good luck to all.
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