Daytrading July 24 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

The pullback in Australian shares looks set to continue at today's open after another round of disappointing corporate earnings dragged Wall Street lower overnight.

The September SPI200 futures contract fell 19 points or 0.4% to 5514 as BHP hit a six-year low in US trade and oil, copper and iron ore declined.

US stocks retreated for a third night with Dow components Caterpillar, 3M and AmEx joining the list of earnings misses this reporting season. The S&P 500 fell 12 points or 0.57%, the Dow 120 points or 0.67% and the Nasdaq 25 points or 0.49%.

“Investors have been somewhat surprised at how unimpressive earnings have been considering where the stock market is,” Jeff Sica, president and chief executive officer of Circle Squared Alternative Investments in the US, told Bloomberg. “Earnings have not proven to be the catalyst they’ve looked for. Investors are just very tentative.”

An earnings season that began brightly last week has floundered this week as a string of big names missed targets, including Apple, Microsoft, Yahoo!, IBM and United Technologies. Roughly half the companies that have reported to date have fallen short of revenue estimates, according to The Earnings Scout, although analysts cut their guidance to reflect a winter slowdown in the US economy. Earnings performance has been better, with around three-quarters of companies beating estimates.

"I think there's been an expectation that the estimates were brought down so markedly that they'd be easy to beat," Quincy Krosby, market strategist at Prudential Financial, told CNBC. "When you have the estimates brought down so much you can't disappoint [or] the market will punish you."

Overnight, American Express fell 2.51%, Caterpillar 3.61% and 3M 3.8%. General Motors climbed 3.96% after announcing improved sales in China.

Pressure on the Federal Reserve to raise rates this year was heightened by news that first-time claims for unemployment benefits fell to a 40-year low last week. Claims unexpectedly dropped by 26,000 to 255,000, the smallest number since November 1973. Read more here. The Conference Board’s leading index of economic indicators, which predicts activity for the next three to six months, rose 0.6% last month. The May reading was revised upwards to a gain of 0.8%.

Commodities and resource stocks remained in the doldrums. BHP lost 2.07% in US trade, closing at its weakest point since 2009. Rio Tinto declined 1.28% but held above this month's low. Spot iron ore for import to China yesterday dipped 10 cents to US$50.60 a dry ton.

Oil settled below US$49 a barrel as traders continued to fret about this week's unexpected rise in US inventories. West Texas Intermediate crude oil for September delivery settled 74 cents or 1.5% lower at US$48.45 a barrel.

A break in gold's ten-session losing run was not enough to convince US investors the worst is over. The NYSE Arca Gold Bugs index dived 4.3% to a new 12-year low as gold for August delivery settled $2.60 or 0.2% ahead at US$1,094.10 an ounce

The bearish mood towards commodities helped push most base metals lower. In London, copper declined 1.7%, aluminium 1.5%, lead 2.4%, nickel 0.2% and zinc 1%. Tin rose 1%. US copper for September delivery was recently down 2.2% at US$2.38 a pound.

"Sentiment is horrific," Nic Brown, head of commodities research at Natixis in the UK, told Reuters. "One after another, you've seen commodities going through some pretty important support levels."


European stocks declined for a third night as news that the Greek parliament passed more legislation to secure bailout funding failed to offset concerns about a global slowdown as US bellwether stocks disappoint. The Stoxx Europe 600 gave up 0.54%, Germany's DAX 0.07% and Britain's FTSE 0.18%. France's CAC edged up 0.08%.

The dollar was this morning buying 73.56 US cents.

TRADING THEMES TODAY

COMMODITIES ROUT TO WEIGH: No break in the global retrace overnight, suggesting we are going lower again today. Market heavyweight BHP broke new multi-year lows in the US and will likely knock a few points off the index here. Gold stocks were also notably weak. This US earnings season threatens to be a fizzer, although students of the market will note that the bad news tends to come in a batch, then - once the market has retraced far enough - earnings seem to miraculously pick up, or perhaps investors start to find the positives. We've had three days of falls in the US and may start to anticipate a reversal early next week, if not tonight. Traders looking for positive omens will like the fact Amazon is up almost 18% in after-market trade at time of writing after delivering an unexpected profit this morning. Chinese data has had less impact on the ASX this year as mining diminished in market weight, but factory data can still affect the market mood here. Markit releases 'flash' July factory data at 11.45am EST. Analysts expect the report to show an improvement to 49.8 this month from 49.4 last month as various government stimulus measures take effect.

ECONOMIC NEWS: No significant domestic news scheduled today. Markit releases preliminary July manufacturing figures for Chin at 11.45am EST. Tonight's US highlights are new home sales and flash manufacturing data.

Good luck to all.