daytrades may 25 pre-market

Morning traders.

Market wrap: A fourth fall in five days on Wall Street points to a weak start for local shares despite some overnight relief for metal prices.

With 10 minutes left to trade, the June SPI futures contract was down 70 points at 4346, suggesting the local share market will give back most of yesterday's gains at today's opening bell.

U.S. equities sold off heavily into the close as investors fretted about the health of the European banking system after signs of stress in Spain. The S&P 500 struggled into positive territory by lunchtime but swooned to finish 1.29% lower. The Dow lost 127 points or 1.24% and the Nasdaq just 0.7% as investors were attracted to "bargain prices" in tech shares.

The plunge in the U.S. was led by bank shares after Spain's central bank placed a smaller savings bank in administration. In other signs of growing strains on the banking system, four other Spanish savings banks petitioned the central bank for permission to merge, while the Libor - the rate at which banks lend to each other - rose above 0.5% overnight for the first time in 10 months amid concern that the credit-worthiness of some banks is deteriorating.

"We have more selling to go," the co-chief investment officer at a U.S. firm told Bloomberg. "There are too many uncertainties about Europe suggesting that the global economic growth may not continue. Get ready for more volatility."

Investors once again sought the perceived safety of the U.S. dollar and precious metals. The U.S. Dollar Index, which tracks the U.S. currency against a basket of six others, was recently up 1.2%.

Gold rebounded sharply from last week's sell-off. The spot gold price was recently up $14.50 or 1.4% on Friday's New York close at $1,191.50 an ounce. Silver and platinum also advanced.

"Gold is pretty much on sale right now," a portfolio manager at Optionsellers.com told MarketWatch. "It reached a level price-wise that brought buyers back to the market."

Industrial metals benefitted from signs that China will not act quickly to cool its charging economy. A Chinese state planning official said the country would be cautious in tightening monetary policy. Copper hit a one-week high and other metals continued to rebound from multi-month lows. In late trade in London, copper was up 1.3%, aluminium 1.5%, lead 1.6%, nickel 3.9%, tin 0.8% and zinc 1.1%.

"There are rumblings out of China that they won't tighten as quickly, so you saw Asian markets rebound very nicely overnight," the principal at a U.S. capital manager told MarketWatch. The Shanghai Composite surged 3.5% yesterday.

The price of oil was little changed as a stronger dollar and the slump in equities quashed hopes of a rally. Crude futures were recently down 8 cents or 0.1% at $69.96 a barrel.

The major European markets were mixed but little changed as investors waited for a clearer outlook. Britain's FTSE gained 0.13% and France's CAC was up 0.01% but Germany's DAX fell 0.4%.

TRADING THEMES TODAY

VOLATILITY RULES: It should be obvious by now that European debt problems are not susceptible to a quick fix. Eventually there will come a day when bad news comes out of Europe and the market shrugs and rallies anyway. That will be a buy signal for investors but it's likely to be some time ahead. Until then, the market will continue to exhibit symptoms of manic depression, sky-high one day and black as night the next. Any rallies will be short-lived and successful overnight holds will require perfect timing - and probably a little luck. On the plus side, there is more than enough intraday volatility most days to offer the nimble good money-making opportunities.

METALS: There are signs that Chinese officials want to reassure the markets that the government is in no rush to cool the economy further after recent falls in house prices and the local share market. That was enough to produce a leap in Chinese shares yesterday and further gains for industrial metal prices overnight. "The sell-off last week was overdone," an analyst at Societe Generale told Reuters. "If you look at the impact Europe has on metals demand, it comes a very, very distant third to China and the U.S." Global sentiment remains weak but this may be the time for investors with longer horizons to start sifting through our battered base metals mining sector.

ECONOMIC NEWS: There's nothing scheduled locally today. In the U.S. tonight: consumer confidence, regional manufacturing and two house price indexes.

Good luck to all.