daytrades july 19 pre-market

Morning traders.

Market wrap: The market is likely to open near a 10-month low after European and US stocks slumped overnight on debt concerns.

The September SPI futures contract ended the night session 22 points or 0.5% weaker at 4425 as a flight from risk saw oil and resource stocks fall while gold and the US dollar rallied.

US stocks closed at their lowest level this month as politicians remained deadlocked over the US debt ceiling and a run of grim housing news continued. The S&P 500 lost 0.81% despite an afternoon rally that halved initial losses. The Dow was off 184 points before closing 95 points or 0.76% lower and the Nasdaq fell 0.89%.

European markets fared even worse as banks were sold off after Friday's release of "stress test" results left investors fretting whether the region's lenders can withstand a Greek default. Banks including ING Group, Royal Bank of Scotland and Lloyds all fell more than 6%. Britain's FTSE dropped 1.32%, Germany's DAX 1.55% and France's CAC 2.04%.

"Politicians on both sides of the Atlantic are not explaining realities to the voters, and this lack of leadership, as much as anything, remains a barrier to improvements in both market and economic prospects," the chief market strategist at JP Morgan Funds told MarketWatch. "The reality is that any solution to US debt problems will require a disciplined plan to both cut entitlement spending and raise taxes over a number of years. Any solution to the European debt problem will eventually require the richer nations in Europe to subsidise the budgets or at least the borrowing costs of their more troubled brethren."

Financial shares suffered the biggest drop among the S&P 500's 10 sectors as the prospect of a US default edged ever closer and the influential Goldman Sachs slashed its growth outlook for the US following a recent run of weak economic reports. An index of home-builder confidence showed a tiny improvement overnight but remains near historically low levels. In US trade, Rio Tinto fell 1.7%, BHP 1.6% and Alumina 0.8%.

Gold provided one of the night's few bright spots, extending its record run to a 10th session. Gold for August delivery added $15.10 or 1% at US $1,605.20 an ounce. September silver put on $1.49 or 3.8% at US $40.56 an ounce.

Oil plunged back under US $95 a barrel before staging another recovery. Crude for August delivery was recently off $1.09 or 1.1% at US $96.15 a barrel.

Industrial metals finished mixed but little changed as traders continued to look through recent turmoil to improved demand in the second half of the year. In London, copper advanced 0.1%, lead 0.8%, tin 0.3% and zinc 1.8%. Aluminium eased 0.1% and nickel 1.5%. US copper was recently down 0.1%.

TRADING THEMES TODAY

TESTING THE LOWS: Another weak start is likely after the debt stand-off in the US continued and European banks copped it sweet. Our market has put in promising mid-session reversals over the last three sessions, suggesting the June lows offer strong support but the glum news from overseas just keeps flowing. Will the support hold a fourth day? Our banks are likely to cop it, in line with weak overseas sentiment towards the sector. Gold and silver miners are the obvious candidates to buck the trend.

CISCO AND IBM: Two breaking news items: shares in IBM rallied 1.85% following the release of the chip-maker's earnings after the close of regular trade this morning. Meanwhile Cisco announced it will cut 9% of its workforce to reduce costs.

ECONOMIC NEWS: The minutes from the last Reserve Bank monetary policy meeting are released at 11.30 am AEST and may give a clue whether there is any merit in recent speculation that the next interest rate move will be down. Housing is again the main interest tonight in the US with the release of housing starts and building permits. German economic sentiment data is also due.

Good luck to all.