daytrades march 8 pre-market

Morning traders.

Market wrap: The share market is likely to open at a one-month low after a new 29-month high for oil overnight dragged US stocks and industrial metals lower.

The March SPI futures contract ended the night session 23 points or 0.48% weaker at 4767 but well off its low after an afternoon rally pared US equity losses as oil eased from around the US$107 a barrel level.

The Dow turned a triple-digit tumble into a loss of 80 points or 0.66%. The S&P 500 lost 0.83% and the Nasdaq 1.4% as another analyst downgrade for computer chip-makers sparked a sell-off across the sector.

Oil remained the market's main concern as fighting continued in Libya and demonstrations loom in Saudi Arabia. Crude for April delivery ran as high as US$106.95 a barrel before retreating to trade recently at $104.86 a barrel, up 44 cents or 0.4% for the session.

"It's going to be hard for the market to push through this headwind from oil in the short-term," the president of RNC Genter Capital Management in the US told Bloomberg. "The oil theme has taken over from the inflation theme because of the effect higher energy prices will have on inflation and economic growth. The market wants to go higher because all the other demographics look solid, but we're entangled in this net of geopolitical uncertainty."

Industrial metals suffered a sharp sell-off and precious metals rallied, reflecting changing risk appetite and inflationary concerns. US copper fell the most in a session since November, recently trading 3% weaker and near a two-week low. In London, copper lost 3.7%, aluminium 1.4%, lead 1.9%, nickel 4.7%, tin 3.7% and zinc 1.7%.

"There is risk concern, and base metals, typically being seen at the risky end of the spectrum, are being sold," Societe Generale analyst David Wilson told Reuters. "The strong oil price and how it feeds through to inflation is also a concern."

Silver and gold continued to advance. Silver for May delivery rallied 54 cents or 1.5% to $35.865 an ounce, a new 31-year high. Gold for April delivery was recently up $4.10 or 0.3% at $1,433 an ounce after earlier touching a new intraday high at $1,445.70.

Australian miners lost ground in US trade. Rio Tinto fell 3.1%, BHP 1.3% and Alumina 3.3%.

A recovery on European markets was snuffed out late in the session by falls on Wall Street. Britain's FTSE dropped 0.28%, Germany's DAX 0.24% and France's CAC 0.74%.

TRADING THEMES TODAY

HINT OF A BOUNCE: Good to see the S&P 500 once again respect the 1,300 level that supported the market in late February. If - and it's a big if - oil continues to ease back from last night's high we might have a base for a short-term rally in the next session or two. However, uncertainty in the Middle East still favours further gains in oil and a negative medium-term outlook for equities in my opinion. Sharp overnight falls in industrial metals are a major headwind for our market this morning but we took a lot of our knocks yesterday and might see a minor recovery from today's opening low. If the oil price plays nice.

ERODING RISK APPETITE: Investors once again forsook so-called "risk assets" overnight (equities, industrial metals, Australian dollar) for safe havens (government bonds, precious metals, US dollar). That's a theme that's likely to endure so long as oil remains at elevated prices. Our dollar has held up well so far, but that's likely to change if we enter a prolonged period of share market weakness. Ironically, a dip in our dollar might actually help Australian equities in the long term by making them less expensive for holders of other currencies. The strong dollar is one reason our market has underperformed the US and Europe.

ECONOMIC NEWS: Monthly business confidence figures are due at 11.30 am. Another quiet night in the US is topped by consumer confidence data.

Good luck to all.