Morning traders. Thanks Trees and after-market regulars.
Market wrap:
Shares are set to open lower after a partial recovery on Wall Street took the edge off another negative night as a collapse in the price of oil continued to rattle world markets.
The March SPI 200 futures contract ended the night session 21 points or 0.4% in the red at 5291 but well off its overnight lows as US stocks bounced mid-session.
The S&P 500 fell as low as 1,992 before trimming its loss to 18 points or 0.87% and a close at 2,003. The loss extended the benchmark index's negative run to five, the longest in 13 months. The Dow gave up 130 points or 0.74% and the Nasdaq 60 points or 1.28%.
“At this point it’s going to get hard to bottom out this market until you’ve bottomed oil,” Jim Paulsen, chief investment strategist at Wells Capital Management in the US, told Bloomberg. “It’s really got people spooked. I do think oil will bottom and the dollar will peak and it’ll get us away from this mini-panic.”
Energy stocks and small caps bore the brunt of the selling after oil sagged another 4%. West Texas Intermediate crude oil for February delivery fell $2.11 or 4.2% to settle at US$47.93 a barrel, a five-and-a-half-year closing low, as the US dollar hovered near nine-year highs. The US energy sector fell 1.47% overnight, but remained above last month's one-year low. The Russell 2000 index of small caps slipped 1.68%.
Wall Street's "fear gauge", the VIX, rallied for the sixth time in seven nights and was lately up 7.8% at 21.5, earlier hitting its highest level since mid-December. The Dow Jones Transportation Average slid 1.65% to a two-month low.
Last night's selling followed downbeat economic data that suggested the US economy might be losing some of the momentum it gathered in the second half of last year. Factory orders declined 0.7% in November. A measure of growth in services activity eased to 56.2 last month from 59.3 in November. December employment figures are due on Friday night.
The rising greenback kept the pressure on copper, which closed near Monday's four-and-a-half-year low in London. London copper lost 1.8%, aluminium 1.6% and zinc 1.4%. Lead was flat. Nickel rallied 0.4% and tin 1.4%. US copper for March delivery was recently off a quarter of a cent or 0.1% at US$2.76 a pound.
Australia's largest iron ore miners closed mixed in US trade as iron ore resumed its recent recovery in China. BHP lost 0.63% and Rio Tinto advanced 1.19%. Spot iron ore for import to China yesterday rallied 30 cents to US$71.10 a dry tonne.
Gold stocks enjoyed a stellar session in the US as traders continued to seek refuge from volatility in other asset classes. The NYSE Arca Gold Bugs index rallied 6.73% to a two-month high as gold for February delivery rallied $15.40 or 1.3% to settle at US$1,219.40 an ounce.
European stocks fell for a third night after the opening dive in the US undercut a cautious recovery. The Stoxx Europe 600 lost 0.71% as Germany's DAX retreated 0.03%, France's CAC 0.67% and Britain's FTSE 0.78%.
The dollar was this morning buying 80.95 US cents.
TRADING THEMES TODAY
HINTS AT A TURNAROUND: An initially nasty session on Wall Street ended on a hopeful note as buyers staged a partial recovery from three-week lows. We didn't see the sort of clean reversal that traders welcome, but there was enough of a recovery to suggest buyers are willing to support the long-term uptrend at these levels. A new quarterly corporate reporting season starting next week in the US might be the tonic the market needs to steady the nerves and provide a distraction from oil and Greek elections. I'm troubled by the continuing weakness in the Dow Jones Transportation Average, which should in theory benefit from lower energy prices but continued to sag overnight - the fact it keeps going lower against a falling oil price suggests some investors are losing faith in the global growth story. Oil is still in freefall and shows no sign of finding a bottom yet. Copper and aluminium also look weak. Iron ore, on the other hand, continues to stabilise. Gold is enjoying an overdue revival.
ECONOMIC NEWS: The AIG Services Index is due at 9.30am EST. A busy night ahead includes monthly jobs, retail and inflation data in Europe and trade data, ADP private payrolls, crude oil inventories and the minutes from the last Federal Reserve meeting in the US.
