daytrading dec 22 pre-market

Morning traders.

Market wrap: A late recovery on Wall Street has Australian shares facing a flat start despite a profit shock from Oracle and fresh worries over European bank funding.

The March SPI 200 futures contract ended the night session 6 points or 0.1% weaker at 4105 as US stocks inched into positive territory in the last hour of trade.

US stocks spent most of the night underwater after Oracle's earnings miss heightened concerns that the European crisis is undermining the economic recovery, while funding problems among euro-zone banks were underlined by huge demand for loans from a new European Central Bank lending program. The Dow dropped around 100 points as European markets rolled over, but recovered to end the session four points or 0.03% ahead. The S&P 500 put on 0.2%, while the tech-heavy Nasdaq copped the full impact of Oracle's disappointment, losing 0.99%.

"The question is: are negative headlines on the European situation starting to affect decision making and will that jeopardise the [US] recovery?" a manager at Alpine Mutual Funds in the US told Bloomberg. "The key thing about the weakness in Oracle is that people were delaying making decisions investing in technology. There's a lot of work to do to solve the European crisis. With sentiment as weak as it is, it's a big problem."

Shares in Oracle plunged more than 10% after the tech bellwether revealed a sharp fall in hardware sales and weak growth in software. The news fuelled a sell-off across the US technology spectrum.

European markets were initially enthused at news that 523 European banks had requested US$641 billion in lending from the ECB as the central bank launched its new program to increase liquidity and encourage banks to buy sovereign debt. However, disappointment quickly set in as the scale of the demand raised questions over the strength of the region's banks. Britain's FTSE ended the night 0.52% weaker and Germany's DAX lost 0.95% and France's CAC 0.82%.

"The good news is a lot more banks will be well funded throughout the next three years," the chief economist at FIH Erhvervsbank told MarketWatch. "But on the flip side of the coin, it also signals a lot more banks than originally thought need capital and that is negative news. It sort of implies the banking sector is far worse off than originally expected."

Concern over the European outlook drove investors back into the US dollar, sapping demand for precious metals. Gold for delivery in February was virtually unchanged, recently up 40 cents at US$1,618.20 an ounce. March silver lost 12 cents or 0.2% at US$29.42 an ounce.

Oil rallied for a third night after the weekly US inventory report showed a larger drop in reserves than economists expected. Light sweet crude for February delivery rallied $1.64 or 1.7% to US$98.88 a barrel.

Industrial metals closed mixed as an initial rally in European equities fizzled out. In London, copper put on 0.7%, lead 0.2%, nickel 0.4% and tin 1.05%. Zinc and aluminium both lost 0.2%. US copper was recently up 0.5%.

TRADING THEMES TODAY

BULLISH SIGNS DESPITE THE WEAKNESS: Further evidence overnight that Wall Street is eager to rally if the negative newsflow pauses long enough. There were enough reasons for the major indexes to finish deep in the red last night, but the Dow and S&P staggered through the headwinds to finish ahead. That's a promising sign for those of us hoping the markets will deliver a modest Santa rally heading into year-end. Subtract the weakness in the US tech sector and it was actually a solid night for US banks, miners and small caps, offering a few clues for our market today.

ECONOMIC NEWS: No significant domestic economic news scheduled today. A busy night in the US tonight has weekly jobless claims, final GDP figures, final GDP price index, revised consumer sentiment and inflation expectations, the leading index, house price index and natural gas storage.


This is the last morning wrap of the year from me as I prepare to close the books ahead of the Christmas holiday. I'll be here for the regular lunchtime post and then absent until the first trading day of 2012. In the spirit of the after-market lounge, the keys to the pre-market and afternoon wraps will be left under the mat for whoever wants to launch the threads while I'm away. Best of the season to all the regulars, lurkers and occasional visitors. It has been a memorable year but by no means the easiest. Here's to better times in 2012. Good luck to all.