Daytrading August 7 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

This week's share market retrace looks set to extend into a third session after US stocks fell for the fourth time in five nights as earnings disappointed and traders pared exposure ahead of tonight's jobs report.

The September SPI200 futures contract dropped 36 points or 0.7% to 5492 as a 'risk-off' session in the US saw gold and other defensive assets rally while equities and oil and retreated.

The S&P 500 slumped 16 points or 0.78%, resuming a downturn after a pause on Wednesday but closing  above its 200-day moving average. The Dow fell 121 points or 0.69% to a sixth straight loss for the first time since October. The Nasdaq shed 83 points or 1.62% as biotechs took a heavy knock.

"There's nervousness among momentum investors caused by some of the outperforming names either missing or giving cautious comments in earnings reports," Robert Pavlik, chief market strategist at Boston Private Wealth in the US, told CNBC. "I don't think much of it is warranted."

Media stocks were a major drag following poorly-received second-quarter updates from 21st Century Fox, CBS and Viacom. Disney was the biggest loser on the Dow for a second day after disappointing investors on Wednesday. At its lowest point overnight, the media sector was off 11% for the week before paring its fall to roughly 8%. To put that fall in perspective, at its peak the S&P 500 Media Industry Index had risen as much 464% since the market bottomed in 2009.

Biotechs provided the rest of the downward pressure, with the Nasdaq Biotechnology Index tumbling 3.95%. The Russell 2000 index of small caps, a traditional risk indicator, lost 1.29%, closing below its 200-day moving average. for the first time since December.

The night's economic data had minimal impact, with the focus this week on the implications of tonight's July jobs report for a rate rise next month. A report last night showed claims for unemployment benefits ticked up by 3,000 to 270,000 last week, but remained near 40-year lows. Read more here.

US investors gave Rio Tinto's earnings update a pass despite news that first-half profits plunged 82% from a year earlier. Read more here. The iron ore giant rallied 2.03% in US trade. BHP eased 0.18%. Spot iron ore for import to China yesterday retreated 10 cents to US$56.30 a dry ton.

The US energy ETF provided some rare relief, bouncing 1.64% even as crude oil settled below US$45 a barrel for the first time since March. West Texas Intermediate crude for September delivery settled 49 cents or 1.1% lower at US$44.66 a barrel amid growing evidence that the downturn in prices has not driven as many producers out of the market as analysts initially expected.

“[US] shale oil producers are lowering costs swifter-than-expected, proving their superior competitiveness within the industry, and consequently surprising with resilient production,” Norbert Ruecker, head of commodities research at private bank Julius Baer, told MarketWatch. “Taking further into account that we are at the peak of the [northern] summer demand season and entering the shoulder autumn months, fundamental support to prices has softened but not to the extent the sell-off implies.”

Goldbugs also had a good session, with the NYSE Arca Gold Bugs index rising 2.47% as traders hedged some risk in traditional havens ahead of tonight's US employment update. Gold for August delivery settled $4.50 or 0.4% ahead at US$1,090.10 an ounce.

Aluminium set a new six-year low as the market reacted to news of a substantial increase in Chinese production. In London, aluminium lost 0.2%, lead 1.2%, nickel 0.1% and zinc 1.4%. Tin closed flat. Copper edged up 0.1%. US copper for September delivery was recently down 0.1% at US$2.35 a pound.

European stocks followed Wall Street lower, with oil stocks leading the way. The Stoxx Europe 600 declined 0.8%, Germany's DAX 0.44%, France's CAC 0.09% and Britain's FTSE 0.08%.

The dollar was this morning buying 73.51 US cents.

TRADING THEMES TODAY

RETRACE CONTINUES: The market looks likely to end the week on its heels after fear won out over greed in the US overnight. US traders were not minded to hang around with a September rate cut likely hanging on tonight's jobs report. Media stocks were on the nose after failing to justify elevated valuations. Biotechs also had a nasty session, though I couldn't find any particular reason for the heavy selling. The good news for Australian investors is that Rio's 82% profit plunge did not phase overseas buyers. Energy stocks saw a relief rally and gold miners rose, although you would have to have a gambling streak to hang around when tonight's US jobs report will likely provide a binary outcome for the sector.

ECONOMIC NEWS: The AIG Construction Index is due at 9.30am EST and June home loans at 11.30am, but today's potential market-mover is the quarterly monetary policy statement from the RBA at 11.30am. Tonight is a 'big ticket' night in the US, with the July non-farm employment change and unemployment rate the main interest. Also due: average hourly earnings and consumer credit.

Good luck to all.