daytrades march 2 pre-market

Morning traders. Tin hats on.

Market wrap: A surge in oil back through US$100 a barrel sent US stocks into a tailspin overnight, pointing to a red start to local trade.

The March SPI futures contract ended the night session 58 points or 1.2% weaker at 4767, which suggests the share market will begin today's session at a one-month low. Gold set a record close in the US but base metals eased as inflationary concerns were heightened by a warning from Federal Reserve Chairman Ben Bernanke that rising energy prices could undermine the US economic revival.

Wall Street hit the skids early in the session and continued downhill to the close. The Dow finished 168 points or 1.38% weaker, the S&P 500 lost 1.57% and the Nasdaq 1.61%.

The falls were triggered by a rebound in oil as NATO prepared troops for possible military action in Libya and Iran arrested opposition leaders ahead of protests scheduled today. Saudi Arabia's benchmark share index tumbled 6.8% overnight and an index of Persian Gulf shares fell 3.7% on fears that civil unrest is spreading throughout the Middle East. Crude oil futures were recently up $3.10 or 3.2% at $100.07 a barrel.

"I don't think the [US] economy is strong enough to handle gas at the pump at $4 a gallon, which is where we're heading," the senior vice-president at Duncan-Williams in the US told MarketWatch. "The political unrest and impact on the energy sector is going to keep a lid on this market."

Federal Reserve Chairman Ben Bernanke said recent strength in commodity prices did not yet threaten the US economy but warned that an oil spike could change that outlook. "Sustained rises in the prices of oil or other commodities would represent a threat both to economic growth and to overall price stability," he said.

Inflationary fears fired precious metals to new highs - gold hit a record and silver a 31-year record. Gold for April delivery was recently ahead $25 or 1.8% at $1,435 an ounce. Silver for May delivery was up 84 cents or 2.5% at $34.66 an ounce.

The increase in risk aversion overnight knocked copper off a two-week high and weighed on base metals and resource stocks in the US. In London, copper eased 0.15%, lead 0.35%, nickel 0.7%, tin 0.2%. Zinc was flat and aluminium added 0.1%. In US trade, BHP fell 1.4%, Rio Tinto 1.7% and Alumina 1.1%.

The major European markets retreated as falls in Middle Eastern bourses accelerated. Britain's FTSE dropped 0.97%, Germany's DAX 0.67% and France's CAC 1.05%.

TRADING THEMES TODAY

ANOTHER LEG DOWN: What a difference a night makes. For the last few days our market has looked like it was building a base for a swing higher, but it will open at a one-month low this morning. Looks like the XJO will breach the long upward trendline from July and that bodes ill for the immediate future. A peaceful resolution to the Libyan crisis would go a long way towards soothing investor nerves, but it should be obvious by now that the "Prague Spring" in the Middle East/North Africa has a long way to run. In the meantime, oil and precious metals look like the places to be and tight stop-loss discipline is essential, particularly for new traders who have not yet experienced a significant market downturn (this may or may not develop into that - the key to prospering as a trader is to ensure that your survival does not depend solely on a rising market). The oil price remains the key to global share markets at present and the current trend is negative.

GDP: The market may get a lift at 11.30 am if quarterly GDP figures confirm that the economy was accelerating at the end of last year. Several economists raised their forecasts for today's figures after yesterday's economic reports came in stronger than expected. Forex Factory says the consensus expectation is for growth of 0.6% last quarter, but Westpac yesterday upped its estimate to 1.1% and Moody's now expects 0.8%.

ECONOMIC NEWS: Quarterly GDP data is due at 11.30 am (see above). Tonight's schedule in the US includes non-farm employment change, job cuts, crude oil inventories, the Fed's Beige Book and further testimony from Federal Reserve Chairman Bernanke on monetary policy before the House Financial Services Committee.

Good luck to all.