daytrades oct 22 pre-market

Morning traders.

Market wrap: Falls in commodity prices point to a flat start to local share trade, despite a late recovery in U.S. equities.

The December SPI futures contract this morning was 4 points or 0.1% stronger at 4634 as a bounce in the U.S. dollar undermined oil and metals.

Wall Street came under pressure as weaker commodity prices hurt resource stocks and continuing worries over bad mortgages weighed on banking firms. However, the major indexes ended the session in positive territory after a member of the Federal Reserve rate-setting committee told reporters he favoured further quantitative easing.

The Dow led gains on the major indexes, rising 39 points or 0.35% to erase lunchtime losses. The S&P 500 added 0.18% and the Nasdaq 0.09%.

"The market is a little tired," a money manager at Security Global Investors in the U.S. told Bloomberg. "We've had a big move. We need to digest that. Commodities have done very well and we're seeing a big pullback. And there's concern about bad loans hitting [U.S.] banks. The longer that fear is there, the worse it is for the market."

BHP and Alumina closed weaker in U.S. trade after commodities retreated, but Rio Tinto edged positive. The U.S. dollar turned higher as the euro struggled against a key resistance level. The dollar index, which measures the buck against a basket of currencies, was recently up 0.4%.

The bull run in precious metals was back under pressure as the U.S. dollar's rise encouraged more profit-taking. December silver fell 73 cents or 3% to $23.14 an ounce. The spot gold price was recently $21 weaker than Wednesday's New York close at $1,325.10 an ounce.

Oil reversed most of yesterday's gains following yesterday's news that refining in China grew at the slowest pace in 18 months. Crude futures were recently down $1.85 or 2.2% at $80.69 a barrel.

Industrial metals were mixed but mostly lower after confirmation yesterday that Chinese growth has moderated, albeit at very high levels. In late trade in London, copper was down 0.5%, aluminium 0.7%, nickel 1.7% and tin 1.1%. Zinc was up 1.3% and lead 0.5%.

"All the things the [Chinese] government are doing have
clearly helped to slow down the economy, but the data shows that growth remains solid and the market was expecting more," the head of base metals at RBC Capital Markets told Reuters. "It remains all about the [U.S.] dollar."

Strong earnings results helped the major European markets record solid gain. Britain's FTSE rallied 0.5%, Germany's DAX 1.33% and France's CAC 1.31%.

TRADING THEMES TODAY

FALLING COMMODITIES: Our mining sector is likely to come under pressure today after solid falls in oil, gold, silver and most base metals overnight. The inverse relationship with the U.S. dollar was again underlined, although the impact of retreats in commodity prices may be partly off-set for some companies by a dip in the Australian dollar back under 98 U.S. cents. Gold and silver look particularly vulnerable this morning. Zinc and lead bucked the down-trend and may offer pockets of strength today.

ECONOMIC NEWS: Quarterly import prices are released at 11.30 am this morning. Of broader significance for world markets is the start of a two-day G20 meeting in Seoul that will address currency issues. Unusually for a Friday, there is nothing major scheduled tonight in the U.S.

Good luck to all.