Daytrading August 10 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

Stocks face a soft start after the Dow slid to its longest losing streak in four years as jobs data increased the odds on a September rate rise in the US and key commodities declined.

The September SPI200 futures contract reduced its loss to two points or less than 0.1% as US stocks pared falls in the final hour of trade. The SPI closed at 5403.

The S&P 500 closed six points or 0.29% lower after falling as much as 15 points as traders concluded that July employment figures were strong enough for the Federal Reserve to proceed with the first rate hike in nine years. The Dow shed 46 points or 0.27%, closing lower for a seventh straight session for the first time since 2011. The Nasdaq lost 13 points or 0.26%.

“I’m not surprised to see the market down given the downward bias we’ve seen the last couple of days,” Michael James, managing director of equity trading at Wedbush Securities in the US, told Bloomberg. “If anything, the report slants the bias towards a September rate hike, given the strength of the jobs numbers.”

Traders 'sold the open' after the July employment report came in broadly in line with expectations. While jobs growth of 215,000 was slightly below the consensus forecast of 223,000, it was close enough for traders to conclude that the Federal Reserve may raise next month. The unemployment rate held steady at 5.3%. Average hourly wages ticked up 0.2% for an annual rate of 2.1%.

The futures market raised the odds on a September rate hike to 55% from 47% before the jobs report, according to CNBC. Read more here.

The rate-sensitive US dollar index briefly touched a four-month high before turning lower. The greenback's initial surge was enough to spark a sell-off in commodities, sending oil towards a five-month low and copper to a six-year low.

The energy and materials sectors were the biggest drag on the S&P 500. The US energy ETF sagged 1.79% after West Texas Intermediate crude oil for September delivery settled 79 cents or 1.8% lower at US$43.87 a barrel, its weakest close since mid-March. Selling accelerated last week following news that US oil companies have increased the number of rigs actively drilling, raising fears that production is not responding to the declining price of crude.

Copper hit a six-year low on the London Metal Exchange before paring its loss to 0.2% as the greenback reversed gains. Zinc fell to a two-year low before also closing 0.2% lower. London aluminium shed 0.2%, nickel 0.2% and tin 1.2%. Lead rallied 1.4%. US copper for September delivery declined 0.7% to US$2.33 a pound.

BHP gave up 0.72% and Rio Tinto 1.17% in US trade. Spot iron ore for import to China did not trade due to a public holiday. Ore last traded on Thursday at US$56.30 a dry ton.

Gold attracted cautious buying once the jobs report ructions had settled. Gold for August delivery settled $4 or 0.4% ahead at US$1,094.10 an ounce after falling as low as US$1,081.40. The NYSE Arca Gold Bugs index gave up early gains to close virtually flat at -0.05%.

European stocks took their lead from the jobs reaction in the US and an unexpected decline in German industrial production. The Stoxx Europe 600 slipped 0.91%, Germany's DAX 0.81%, France's CAC 0.72% and Britain's FTSE 0.42%.

The dollar was this morning buying 47.17 US cents.

TRADING THEMES TODAY

REACTION TO CHINA/US JOBS: After a horror week when the ASX tumbled 4%, a relief rally looks likely sometime this week but not necessarily today. The index may want to test the July low at around 5400 first. ANZ's massive capital raising cast a long shadow over the market at the end of last week, so the outlook for the week very much depends on when the sell-off among the big banks is complete. On Friday, Wall Street decided the Fed had enough jobs growth to make a September rate hike more likely, but by no means certain. China is back as an issue this morning following more dire economic numbers over the weekend. Read more here. A weak China equals poor demand for Australian raw materials equals pressure on the ASX.

ECONOMIC NEWS: No significant domestic news scheduled today. Tonight's US highlights are a trio of speeches from Federal Reserve officials and the labour market conditions index.

Good luck to all.