daytrades jan 5 pre-market

Morning traders.

Market wrap: A mixed night on Wall Street and a sharp pull-back in key commodities has set up the Australian share market for a flat start.

The March SPI futures contract ended the night session 3 point or 0.06% higher at 4739 despite falls in oil, gold, copper and Australian miners listed overseas.

Stocks in the U.S. pared early falls after the minutes from the last Federal Reserve meeting revealed no changes to the central bank's program of stimulus measures for a sluggish economy. The benchmark S&P 500 closed 0.13% lower and the Nasdaq dropped 0.38% but strength in the blue chips helped the Dow edge up 20 points or 0.18%.

The Fed minutes reiterated the central bank's view that the U.S. economy is gradually improving but not fast enough to require any amendment to its "QE2" $600 billion bond buying program. The release of the minutes at 6 am EST did little to stem a rebound in the U.S. dollar that sparked a sharp sell-off in oil and gold overnight and weighed on Australian miners listed in the U.S.

The U.S. dollar index, which measures the greenback against six major currencies, was recently up 0.4%. The Australian dollar was recently down more than 1% at $1.0056 U.S. dollars.

BHP fell 1.6%, Rio Tinto 0.8% and Alumina 2.6% in U.S. trade as some investors rotated from commodities into the U.S. dollar and government bonds. Materials was the weakest of the S&P 500's 10 sectors overnight.

Gold suffered its biggest overnight fall in six months, tumbling to a three-week low. Gold for February delivery was recently down $41.40 or 2.9% at $1,382 an ounce. Silver for March delivery slumped $1.29 or 4.1% to $29.84 an ounce.

Oil skidded off yesterday's two-year high. Crude futures were recently down $2.25 or 2.5% at $89.30 a barrel.

Base metals traded in London were mixed, but U.S. copper fell for a second day, down another 1.6% from Monday's all-time high. In late trade in London, copper was down 0.3%, tin 1.5% and zinc 0.4%. Aluminium was unchanged, lead up 1.4% and nickel 1%.

The major European markets closed mixed but Britain's FTSE roared back from holiday with a 1.9% rally. Germany's DAX dipped 0.2% and France's CAC added 0.4%.

TRADING THEMES TODAY

COMMODITY SLUMP: Looks like some pain in store today for holders of precious metals miners and to a lesser extent, oilers and copper miners. Market commentators were fumbling for explanations for last night's sharp falls but it appeared momentum selling and plain old profit taking had a lot to do with it. After all, copper started the week at a record high, oil at a two-year high and gold near December's record close. There's no reason yet to see last night's falls as anything more than blips in solid up-trends. There could be some good buying opportunities today if the market over-reacts.

ECONOMIC NEWS: The local calendar is clear today. The key reports tonight in the U.S. are likely to be non-farm employment change and the non-manufacturing purchasing managers' index. Also scheduled: year-on-year job cuts and weekly crude oil inventories.

Good luck to all.