Daytrading November 10 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

Share are pointing sharply lower for a second day after BHP hit a post-GFC low in US trade as the prospect of a rate rise next month helped drive Wall Street to a fourth straight loss.  

The December SPI200 futures contract declined 49 points or 1% to 5068 after earlier marking a five-week low as weak Chinese trade data released over the weekend added to pressures on commodity prices.

US stocks retreated as traders priced in the increasing likelihood that the Federal Reserve will lift its key rate next month. The S&P 500 fell 21 points or 0.98%, its fourth in a row. The Dow shed 180 points or 1% and the Nasdaq 52 points or 1.01%.

The retreat followed unexpectedly strong October employment data released on Friday, which boosted the odds on a December hike from 58% to around 70%. The S&P 500 entered this week on a six-week winning run, the longest of the year.

“People sort-of stewed on it over the weekend that we’re facing a rate hike in December,” Robert Pavlik, chief market strategist at Boston Private Wealth in the US, told Bloomberg. “I don’t think it’s the 25 basis points that’s necessarily leading the market down, but what comes after. How fast and furious do the rate hikes come now that this cheap money environment is coming to an end?”

European stocks set the downbeat tone for the session after anti-austerity parties moved closer to election victory in Portugal. The Portuguese PSI 20 Index sagged 4.05%, the Stoxx Europe 600 1.07%, Germany's DAX 1.57%, France's CAC 1.46% and Britain's FTSE 0.92%.

Also weighing on market sentiment was a global growth downgrade from the Organisation for Economic Co-operation and Development. The OECD reduced its economic growth expectation for this year to 2.9% from a September prediction of 3% and a June estimate of 3.1%, citing under-performing global trade as China slows down.

"Many economies, especially the emerging markets, face financial challenges, as well as a weaker outlook for their exports," the OECD noted in the report, quoted on CNBC. "Robust trade and global growth go hand in hand... The growth rates of global trade observed so far in 2015 have, in the past, been associated with global recession."

Australian mining heavyweight BHP fell 2.63% in US trade to its lowest point since 2008. The company's shares have faced heavy selling since a dam burst at a joint venture in Brazil. Estimates for the damages bill run as high as US$1 billion. Rio Tinto edged up 0.12% after spot iron ore for import to China yesterday rebounded 40 cents to US$47.70 a dry ton.

While the rate-sensitive US dollar index backed 0.22% off Friday's seven-month high, most commodity prices remained under the pump following weekend news that Chinese trade declined sharply last month.

Copper fell to within US$100 of a six-year low in London before paring its fall. Three-month copper closed 0.5% lower at US$4,964 a tonne after falling as low as US$4,955. The metal touched US$4,855 in August. Also in London, aluminium gave up 0.9%, lead 0.2%, nickel 0.6%, tin 0.6% and zinc 1%. US copper for December delivery was recently down 0.6% at US$2.23 a pound.

The US energy ETF slid 0.99% following a fourth straight decline in crude oil. West Texas Intermediate crude oil for December delivery settled 42 cents or 1% lower at US$43.87 a barrel.

“The combination of confirmed evidence of global trade weakness, and a huge question mark about global oil demand growth for the first half of 2016, are colliding with the strong [greenback] to create a nasty suppression of oil prices,” Richard Hastings, macro strategist at Seaport Global Securities, told MarketWatch.

Gold stocks staged a shallow rebound after the precious metal broke a seven-session losing run. The NYSE Arca Gold Bugs index bounced 2.52%. Gold for December delivery settled 40 cents ahead at US$1,088.10 an ounce.
   
The dollar was this morning buying 70.57 US cents.

TRADING THEMES TODAY

RETRACE GATHERS PACE: The mood on the ASX has deteriorated markedly over the last two weeks, with BHP's Brazilian catastrophe the straw that broke the camel yesterday. Wall Street was due a retrace and got underway overnight, adding to the down-pressures here. There's a growing danger that we'll see 5000 once again on the XJO - perhaps even the September lows if things really go to pot. The speculative end of the market has so far been insulated from the weakness at the top end - the Small Ords has outperformed the XJO - but that won't continue indefinitely. The specs tend to trail moves on the broader market in both directions. China releases inflation figures at 12.30pm EST that will likely have a say in how we finish up today.

ECONOMIC NEWS: October business confidence data and September home loans are due at 11.30am EST. China releases consumer and producer inflation figures at 12.30pm. A round of second-tier US data tonight includes import prices, wholesale inventories and a small business index.

Good luck to all.