Daytrading August 21 pre-market

Morning traders. Thanks Trees and after-market regulars. Good to have you back, Mitta - warm congratulations on your diagnosis.

Market wrap:

The share market is poised to open at its lowest level of the year after concerns about global growth and US rates triggered Wall Street's heaviest fall in a year and a half.

The September SPI200 futures contract dived 67 points or 1.3% to 5170 as benchmark equity indices in the US declined more than 2% and closed at session lows.

The S&P 500 opened below its 200-day moving average - used by many investors as an important technical indicator - and finished 44 points or 2.11% in the red at its weakest level since February. The Dow shed 358 points or 2.06% and the Nasdaq 142 points or 2.82%.

“There is heightened uncertainty that began with yuan devaluation last week, while overall China’s growth is slowing faster than thought. This is weighing on confidence,” Randy Frederick, managing director of trading & derivatives at Schwab Center for Financial Research in the US, told MarketWatch. “Technology and consumer discretionary, or momentum stocks are selling off, because they had performed pretty well recently and so have more room to fall during broader market sell-offs."

A global pullback began once again in China, where the Shanghai Composite fell 3.42% yesterday, exacerbating fears that government intervention will be unable to stem the outflow of funds as the Chinese economy slows. Overnight, Citigroup reduced its global growth forecast for next year to 3.1% from 3.3% to reflect slower Chinese growth after the People's Bank of China last week began aggressively devaluing the yuan to support exports. The rapid slide in the yuan has added to volatility in commodities and emerging markets, and placed a question mark over whether the US Federal Reserve will press ahead with a rate increase next month. Kazakhstan's currency fell by more than a quarter overnight after its central bank stopped defending the tenge against tumbling oil prices, introducing a free float. Read more here.

"The market has really taken a pessimistic stance vis-a-vis the Fed," Dave Schiegoleit, senior portfolio manager with The Private Client Reserve of US Bank, told CNBC. "We're hearing comments from people taking a dovish stance that the Fed could cramp the fragile growth we're seeing... If the Fed holds off then that means the Fed is seeing something the market isn't."

Wall Street's 'fear index', the VIX, jumped more than 25% amid anxiety about a broader pullback once the major indices broke major technical support. The volatility index rallied for a fourth straight night and is on course for its biggest weekly gain of the year.

Risk assets such as small caps and momentum stocks under-performed the broader market. The Russell 2000 index of small caps fell 2.53% and the Nasdaq Biotechnology Index 4.04%.

Europe's benchmark index closed perilously near a correction following reports that Greek Prime Minister Alexis Tsipras is about to call a snap election, potentially derailing recent progress on debt talks. The Stoxx Europe 600 slid 2.06% to extend its decline since it peaked on April 15 to 9.8%. Germany's DAX declined 2.34%, France's CAC 2.06% and Britain's FTSE 2.11%.

Gold and US treasuries benefitted from a 'flight to safety'. The NYSE Arca Gold Bugs index rallied 5.45% to a five-week peak after gold for December delivery surged $25.30 or 2.2% to settle at US$1,153.20 an ounce, also a five-week high.

Australia's largest miners resisted the worst of the selling after settling at multi-year lows in the US on Wednesday night. BHP dropped another 0.61%, while Rio Tinto clawed back 0.46%. Spot iron ore for import to China yesterday eased 30 cents to US$55.60 a dry ton.

Energy stocks were flogged in the US even as crude bounced. The US energy ETF tanked 2.26% to its lowest point in more than three years. West Texas Intermediate crude oil for delivery in September settled 34 cents or 0.8% ahead at US$41.14 a barrel.
  
A weaker US dollar helped copper and aluminium rebound from six-year lows. In London, copper rallied 2.7%, aluminium 1.1%, lead 1.6% and zinc 1.8%. Nickel gave up less than 0.1% and tin 1%. US copper for September delivery was recently up 1.9% at US$2.32 a pound.

The dollar was this morning buying 73.42 US cents.

TRADING THEMES TODAY

BLAME BORAT: Didn't think I'd ever get the opportunity to blame Glorious Nation of Kazakhstan for a market rout, but here goes. Kazakhstan's central bank send shivers through world financial markets overnight by firing the latest shot in the 'currency wars', cutting its currency free and watching it instantly fall more than 26%. That's the kind of extreme move that unnerves investors. Of course, there is more to the market volatility than an obscure central Asian republic. China's great experiment in intervention in the free market looks increasingly shaky. The US Fed is stuck between a rock and a hard place - it it raises rates next month it risks stifling anemic growth just as China rolls over, while sitting on its hands would send a signal that things may be worse than share-market valuations suggest. We are also in a time of seasonal weakness in the US, where low holiday volumes exaggerate moves in either direction. It's a nasty cocktail that suggests we're likely going lower in the short term. Keep an eye out for a Chinese factory activity update today at 11.45am EST, which has the potential to change the mood markedly for better or worse.

ECONOMIC NEWS: No significant domestic news scheduled today. The Caixin Flash Manufacturing PMI is due at 11.45am EST. Tonight's only significant US data is the flash manufacturing PMI.

Good luck to all.