daytrades march 17 pre-market

Morning traders. Tin hats back on.

Market wrap: Shares are set to reverse yesterday's gains at today's open following a third night of falls on Wall Street as nuclear jitters continued to roil overseas markets.

The March SPI futures contract ended the night session 76 points or 1.7% lower at 4491 after further heavy losses on European stock markets and fresh three-month lows in the US.

Losses accelerated after the European Union's energy chief warned that problems at Japan's nuclear plants were "effectively out of control" and could lead to "possible catastrophic events". A modest late recovery saw the Dow trim a 299-point plunge down to a loss of 242 points or 2.04%. The S&P 500 lost 1.95% and the Nasdaq 1.89%.

"The risks have risen and you have to be mindful of them," the chief market strategist at Columbia Management in the US told Bloomberg. "It's difficult to nail down what's accurate information coming out of Japan and what isn't. There's concern that the problems at the nuclear plants are far more serious than the problems associated with the earthquake. In addition to that, there's ongoing housing weakness in the US and a fear premium built into the oil market. That's why you have to hedge your bets."

A breach in a "containment vessel" at a reactor at Japan's Fukushima Dai-Ichi plant appeared to increase the risk of a radioactive leak. The United Nations has called an emergency meeting to address the crisis and the US Embassy advised American citizens living within 50 miles of the nuclear plant to evacuate.

The latest developments sent Wall Street's "fear gauge", the VIX, to its highest level since July. The index, which measures the cost of insuring against falls in the S&P 500, rallied another 20% and is now up 45% in three days.

No US sector was left untouched by the broad decline, but house-builders fared worse than most after the sharpest fall in US monthly housing starts in nearly 27 years and a collapse in new building permits to record lows. The falls underlined ongoing weakness in the housing market.

Australian miners listed in the US suffered further losses, despite modest overnight gains in key resources. Rio Tinto fell 3.8%, BHP 2.4% and Alumina 1.7%.

Oil recovered some of this week's losses following violent clashes in Bahrain and a smaller-than-expected rise in US inventories. Crude futures rallied $1.05 or 1.1% to $98.23 a barrel.

Precious metals inched higher but moderated gains as the US dollar attracted some "safe haven" buying as equities tumbled. Gold for April delivery was recently up $3.90 or 0.3% at $1,397 an ounce. May silver added 7 cents or 0.2% at $34.19 an ounce.

Copper clawed back from yesterday's three-month low as bargain-hunters stepped. In London, copper rallied 1.2%, lead 2.5%, nickel 0.7% and zinc 1%. Aluminium eased 1% and tin 0.9%. US copper was recently up 1.2%.

"There is some bargain hunting starting to appear in the market which is leading to some increase in pricing, and we've had short covering so I think we're in for a little bit of support near term," Deutsche Bank analyst Daniel Brebner told Reuters. "But there there are plenty of worries out there, so this could all be quite temporary."

The major European markets slumped after a downgrade of Portugal's credit rating and accelerated losses after remarks from the EU's energy commissioner elevated fears about the deteriorating situation in Japan. Britain's FTSE fell 1.7%, Germany's DAX 2.01% and France's CAC 2.23%.

TRADING THEMES TODAY

FUKUSHIMA DAI-ICHI: Last night's overseas performance confirms that we're in an event-driven market running on fear. A rocky session got much worse after the EU energy commissioner's bleak assessment of the situation in Japan. This is not a time to add fresh overnight holds in my opinion because you're effectively punting on events beyond our control. Either the situation at Fukushima Dai-Ichi improves or it could get a lot worse, but there's no genuine way for me as a layman to assess which is more likely so I'll stick to quick intraday plays until the outcome is clearer. In the meantime, this twitchy market will suffer violent swings between hope and fear.

SAFETY FIRST: When market sentiment sours, certain reliable themes develop. First, retail-investor participation falls dramatically which means a loss of liquidity at the speculative end of the market. Without liquidity, it's much harder to get safely in and out of positions. During corrections I devote most of my trading to the medium-caps, where liquidity remains high and volatility increases. Secondly, defensive sectors such as health, utilities and telecoms weather storms better than cyclicals during the down-days - they can make nice intraday recovery plays from oversold levels. Thirdly, as I suggest above, overnight holds are a much higher risk in this environment because of the violence of overnight swings.

ECONOMIC NEWS: The quarterly Reserve Bank Bulletin is due at 11.30 am today. Inflation data tops another full schedule tonight in the US that includes the consumer price index, core CPI, weekly unemployment claims, Philly Fed manufacturing index, industrial production, the leading index, capacity utilisation rate and natural gas storage.

Good luck to all.