daytrading april 16 pre-market

Morning traders.

Market wrap:

Shares are likely to give back most of Friday's gains at today's open after Wall Street ended its worst week of the year with another sharp reversal.

The June SPI 200 futures contract closed 31 points or 0.7% weaker at 4300 on Saturday morning as China's disappointing growth report fuelled a retreat from risk.

The S&P 500 finished a topsy-turvy week that included its best two-day rally of the year with a slump of 1.25% on Friday for a weekly loss of 2%. That was the biggest weekly decline of the year and the first back-to-back weekly losses since November. The Dow fell away in the final hour to a loss of 137 points or 1.05% and the Nasdaq dropped 1.45%.

Commentators pinned three factors for the change in sentiment after two days of strong gains: the Chinese economy slowed to its weakest pace in three years, US consumer confidence dimmed and perhaps most significantly, the cost of insuring against a Spanish default hit record levels.

Rumours that swirled around US trading rooms on Thursday that China's quarterly GDP was going to surprise to the upside proved unfounded when the first-quarter report showed the annual rate of growth slowed from 8.9% to 8.1%. The decline resurrected fears that one of the main engines of global growth may be slowing faster than analysts predicted.

"Everybody's worried and everybody's unsure if the global economy can stand on its own, and China is a big part of global growth," the chief investment officer at Cornerstone Wealth Management in the US told MarketWatch. "If it slows too rapidly, that would create a lot of pain. I don't think it will, but there's uncertainty.

The pullback in stocks accelerated after a report showed consumer sentiment in the US eased to 75.7 this month from 76.2 in March as the cost of fuel increased. Financials were the worst of the sectors after European concerns stoked heavy falls in European lenders. The sector dropped 2.5% despite upbeat earnings reports from JPMorgan and Wells Fargo.

The major European markets sagged after new data showed how dependent Spanish banks have become on central bank lending, intensifying solvency concerns. Spanish borrowing from the European Central Bank doubled last month. The figures helped push Spanish credit-default swaps to a record high, bond yields to a five-month peak and stocks to a three-year low. Spain's IBEX 35 swooned 3.58%, Italy's FTSE MIB lost 3.43%, Germany's DAX 2.36%, France's CAC 2.47% and Britain's FTSE 1.03%.

Commodity markets took their cue from the slowdown in the pace of Chinese growth. US oil finished lower for a fourth week in five. On Friday crude for delivery in May eased 80 cents or 0.8% to US$102.84 a barrel.

Copper fell to a three-month low as investors pared their bets on a soft landing for China. In London, copper gave up 2.6%, aluminium 1.3%, lead 1.8%, nickel 2%, tin 1.9% and zinc 2.3%. US copper lost 2.8% on the day and 4.5% for the week.

Gold ended a winning week with a modest fall. Gold for June delivery fell $20.80 or 1.2% to US$1,659.80 an ounce after three days where it rallied at least 1%.

TRADING THEMES THIS WEEK

CHINA SLOWING: Friday's reaction to China's GDP report was a head-scratcher. Asian markets and Australia shrugged off a modest easing in the pace of growth but Europe and the US reacted like the sky was falling. Of course, there were other factors in the equity losses there, but the slump in commodity markets will weigh on the ASX at the start of this week. Traders should watch how Shanghai and Hong Kong react this morning for clues to the rest of the week.

US EARNINGS WEEK 2: The early results from the latest US quarterly earnings season show there is ample room for positive surprises after last year's global economic wobble encouraged analysts to slash their earnings expectations for this season. US investors have a healthy capacity for ignoring overseas woes if domestic corporates are delivering the goods, so let's hope this week's focus is on the strength of the US, rather than Europe's weakness. Companies due to report this week include: Bank of America, Citigroup, Goldman Sachs, Microsoft, IBM, Intel and Yum!

EUROPE BACK IN SPOTLIGHT: The euro-zone is not yet back in full-blown crisis but the signs are ominous. Spanish and Italian 10-year bond yields are creeping higher and the cost of insuring against a Spanish default touched 500 basis points for the first time on Friday. Fear feeds on itself, so another central bank circuit-breaker may be necessary before the momentum picks up.

ECONOMIC NEWS: A fairly slow week for scheduled domestic news includes: the minutes from the last Reserve Bank meeting, motor vehicle sales (tomorrow); leading index (Wed); and quarterly import prices (Fri). The US starts the week at full-speed. This week's highlights include: retail sales, Empire state index, inventories, home builders' index (tonight); housing starts, industrial production, capacity utilisation (tomorrow); weekly jobless claims, existing-home sales, leading indicators and Philly Fed (Thu).

Good luck to all.