daytrades may 19 pre-market

Morning traders.

Market wrap: Australian stocks are poised to open at an eight-month low after early gains on Wall Street slipped away as Germany moved to ban short-selling of key investments.

With 5 minutes left to trade, the local June SPI futures contract was down 55 points at 4437, suggesting the share market will open at a level last seen in September.

Wall Street was ahead in early trade but wilted as the euro slumped to a new four-year low against the U.S. dollar after reports - now confirmed - that Germany's financial-services regulator will temporarily ban naked short selling and naked credit-default swaps of euro-area government bonds and shares of 10 banks and insurers starting at midnight. The news fuelled fears that the European debt situation may be worse than it appears.

"It makes it look as if the Germans are worried about something behind the scenes that the market's not aware of," a U.S. chief market strategist told Bloomberg. "It almost looked panicked, which further undermines confidence in the markets. They've done as poor a job as one can do in delivering a message."

The Dow Jones Industrial Average, up around 90 points in the morning, closed 115 points or 1.08% lower. The S&P 500 lost 1.42% and the Nasdaq 1.57%.

European news once again overshadowed positive U.S. domestic news, where housing starts hit their highest level since late 2008, Wal-Mart beat profit expectations with its first-quarter earnings report and the producer price index offered a benign view of inflation.

The euro slid below US$1.22 for the first time since April 2006, helping the U.S. dollar index to a fresh one-year high and pressuring dollar-denominated commodity prices.

Also weighing on market sentiment in the U.S. were reports of new rules to curb trading in the largest stocks when markets plunge uncontrollably. "Circuit breakers" will apply to all stocks in the S&P 500 index, sources said of a plan crafted by U.S. regulators and exchanges following the May 6 1,000-point plunge on the Dow.

Hints of a rally in oil were snuffed out by the rising greenback and falling confidence, sending crude futures to a seven-month low. Crude for June delivery was recently trading 81 cents or 1.16% lower at $69.27 a barrel.

Gold had a turbulent ride, slumping in early trade but recently recovering to trade little changed as investors looked once again for "safe havens" from market turmoil. The spot gold price was recently 10 cents lower than Monday's New York close at $1,224 an ounce.

Most industrial metals recovered strongly in London from yesterday's heavy losses. In late trade, Forexyard reported copper was up 4%, aluminium 4.3%, lead 2.4% and nickel 5%, but tin was off 2.1% and zinc 5.5%.

The major European markets lodged their first gains in three sessions as the early gains in commodity prices helped mining stocks. Britain's FTSE rallied 0.85%, Germany's DAX 1.47% and France's CAC 2.08%.

TRADING THEMES TODAY

KEY MARKET SUPPORT UNDER PRESSURE: The 4500 level has been a key support for the All Ordinaries index for the last eight months. It looks like we will start the day below that level and the breach may induce further technical selling as a huge broadening wedge breaks to the downside. The current technical outlook is deteriorating fast. Caution advisable.

BASE METALS: There was a relief rally last night in industrial metals as short-sellers took some profits and metals bounced back from "oversold" territory. However, trade in London ended before the reversals on Wall Street and in the U.S. dollar had accelerated, so the gains may be slightly misleading. Market commentators seem to be mostly bearish, so I wouldn't bet the family ranch on last night's rally continuing.

ECONOMIC NEWS: The monthly consumer sentiment reading is due at 10.30 am, along with a speech by RBA Assistant Governor Malcolm Edey. The quarterly wage price index is due at 11.30 am. In the U.S. tonight: the consumer price index, minutes from the last Fed rates meeting, crude oil inventories and mortgage delinquencies.

Good luck to all.