daytrading dec 20 pre-market

Morning traders.

Market wrap:

Shares face a flat start as this year's only "quadruple witching" session on the ASX cushions the market open from a sharp retreat on Wall Street.

The December SPI 200 futures contract ended the night session one point or less than 0.1% weaker at 4625 as traders prepared for the expiry of four types of contract today: index futures, index options, stock options and stock futures.

US stocks fell back from Tuesday's two-month high as housing starts disappointed and the White House dismissed the latest Republican budget offer. The S&P 500 sagged 0.75%, finishing at its low for the night as traders took a more sober view of the prospects for a fiscal cliff deal before the end of the year. The Dow dropped 99 points or 0.74% and the Nasdaq lost 0.34%.

"The stock market has rallied in anticipation that a deal on the fiscal cliff will be reached soon," the chief investment strategist at Raymond James & Associates in the US told Bloomberg. "In theory, an agreement could be reached and signed into law after Christmas, but that's unlikely. There's simply not enough time to iron out the details."

White House spokesman Dan Pfeiffer said President Obama will veto the latest Republican budget proposal, the so-called "Plan B", which may go before the House of Representatives for approval as early as tonight. "The proposal from the Ohio Republican would give millionaires a tax break of US$50,000, while eliminating tax cuts that 25 million students and families struggling to make ends meet depend on," Pfeiffer said.

The market slipped soon after the open as November data painted a mixed picture of the housing market. Building permits jumped 3.6% to the highest level in four years but housing starts dropped 3%.

European markets held onto gains as Greece's credit rating was upgraded and the Ifo German business-climate index improved for a second month, raising hopes that the worst of the euro-zone debt crisis is behind. Germany's DAX rallied 0.2%, France's CAC 0.45% and Britain's FTSE 0.44%. The Athens General Index surged 4.81% after S&P raised the Greek government's credit rating from selective default to B minus.

Oil rallied for a fourth session after the weekly US inventory report showed an unexpected fall in distillates. West Texas crude oil for January delivery was lately up $1.47 or 1.7% at US$89.40 a barrel ahead of the contract's expiry this morning.

Base metals continued to retreat from last week's multi-month highs as traders squared positions ahead of year-end. US copper for March delivery was recently down five cents or 1.25% at US$3.61 a pound. In London, copper lost 1.6%, aluminium 0.2%, nickel 1.3%, tin 0.2% and zinc 0.6%. Lead edged up 0.3%.

Gold see-sawed either side of break-even as it searched for a floor after Tuesday's tumble. Gold for February delivery was lately down 40 cents or less than 0.1% at US$1,670.30 an ounce.

TRADING THEMES TODAY

WALL STREET SOBERS UP: The stock market has made a significant wager that a budget deal will happen in the US, but there will be jitters as the clock winds down ahead of Jan 1. Tempus fugit, as McKagan might say. BHP and Rio lost ground in US trade and Alcoa was dumped under threat of a credit downgrade. Small caps were steady in the US despite the downturn - always late to the party and last to realise it's near midnight. However, our market will likely play its own game today as four different types of contract expire (see below).

QUADRUPLE WITCHING: Expect fun and games in the blue-chip/mid-cap buy/sell queues leading up to the market open as institutional traders look to settle a variety of different contract types this morning. There will be wild swings in projected opening prices from the surreally high ("Wey-hey! I'm a millionaire!") to the jaw-droppingly low ("Gulp. I'm ruined"). By and large you can ignore these shenanigans because the vast majority of prices will open roughly where they closed yesterday. Expiry days used to offer occasional bargain entries where the selling was heavier than the buying, but like most money-making market anomalies, these seem to have been ironed out. Still, I keep an eye on the indicated openings just in case.

ECONOMIC NEWS: The Reserve Bank releases its quarterly bulletin at 11.30am EST. China releases a leading index of economic indicators at 1pm, but its impact is minimal. Highlights of a busy session in the US tonight include weekly jobless claims, final GDP and GDP price index data, sales of existing homes, Philly Fed Manufacturing Index, a leading index and house price index.

Good luck to all.