Daytrading Oct 16 pre-market

Morning traders. Normal service resumed. Thanks Trees and after-market regulars.

Market wrap:

The share market looks set to reverse yesterday's gains after a wild night on world markets saw US stocks hit six-month lows, European stocks enter a technical correction and a commodities index touch its lowest point in five years.

The December SPI 200 futures contract fell 42 points or 0.8% to 5179 as US stocks suffered their heaviest intraday falls in three years before paring losses.

A toxic mix of weak economic data and corporate earnings combined with another Ebola case in Texas and bearish technical signals to fuel a "flight to safety". The S&P 500 fell as much as 3% mid-session before trimming its decline to  16 points or 0.84%. The Dow gave up more than 400 points intraday before closing 173 points or 1.06% in the red. The Nasdaq extended its decline from its peak beyond 10% - a technical correction - but rebounded to close just 12 points or 0.29% underwater.

“The market is transitioning from fear to outright panic,” Gene Peroni, portfolio manager at Advisors Asset Management in the US, told Bloomberg. “We’re moving toward the bottom of the market correction. We’re probably not quite there yet, but this is a necessary precursor to a bottom, that is, to have this type of panic, selling frenzy.”

Traders dumped equities in favour of government bonds and precious metals before a late rally curbed losses on disalloweds. The VIX or volatility gauge surged to its highest level since December 2011 and was lately 12.5% ahead for the night but well below its peak.

A string of soft economic reports exacerbated concerns that weakness overseas is undermining recent advances in the US. Retail sales declined 0.3% last month, three times as much as economists anticipated following a 0.6% jump in August. Manufacturing in the greater New York region continued to grow this month but at a much smaller pace - the Empire State Manufacturing Index slumped to 6.2 from 27.5 in September. Wholesale prices dropped a seasonally-adjusted 0.1%.

The first big night of quarterly earnings produced notable disappointments from Bank of America and KeyCorp, which cast a pall over the financial sector. Shares in BoA fell 4.6% and helped drag an index of bank shares down as much as 4.7% at one point, the largest decline since 2012.

Airline stocks extended their decline from their peak to 20% after authorities reported that a second health-care worker had tested positive for Ebola after treating the nation's first patient.

A seventh straight loss pushed Europe's benchmark index into a technical correction. The Stoxx Europe 600 plunged 3.16% to end the session 11% off its June 10 bull-market high as investors fretted about a collapse in growth in Germany, the continent's economic engine. Germany's DAX lost 2.87%, France's CAC 2.76% and Britain's FTSE 2.83%. Greece's main index cratered 6.3% on concerns over government plans to exit its assistance package.

Bloomberg's Commodity Index, which measures 22 raw materials, dropped to its lowest level since July 2009 as oil threatened to break below US$80 a barrel and base metals were hit by weak Chinese inflation data. West Texas Intermediate crude oil for November delivery was lately down 25 cents or 0.3% at US$81.65 after falling as low as $US80.01.

A slowdown in Chinese consumer inflation to 2010 levels and weak US data contributed to sharp losses on base metals. In London, copper sagged 2.3%, aluminium 1.5%, lead 2.3%, nickel 3.2%, tin 0.2% and zinc 3%. US copper for December delivery was recently down four cents or 1.4% at US$3.05 a pound.

Gold attracted haven buying, rising for a third night. Gold for December delivery advanced $10.50 or 0.9% to US$1,244.80 an ounce.

Australian market heavyweights BHP and Rio Tinto closed mixed in US trade. BHP gained 0.51% and Rio Tinto lost 1.25%. Spot iron ore for import to China yesterday slid 90 cents to US$82.20 a dry tonne.

The dollar jumped more than a cent overnight as the greenback's recent rally was capped by the weak economic news. The Aussie was this morning buying 88.09 US cents.

TRADING THEMES TODAY

WILD TIMES: Wow, what a night. These sorts of swings haven't come along very often since the GFC ended. The scale of the fall on Wall Street and - more importantly - the size of the rebound just might mark a turning point in this correction. However, fear is the dominant emotion on world markets right now and that can take a while to overcome once it has infected the floors of disallowed. The Ebola scare in the US may be small in the scheme of things, but it does feed into the current atmosphere of dread. Back home, the market mood is improving, with signs over the last two sessions that investors see value at these levels if Wall Street takes a break from selling. Time for cautious buying?  

ECONOMIC NEWS: The monthly inflation expectations report is due at 11am EST. Europe releases inflation data tonight. US highlights include weekly jobless claims, industrial production, Philly Fed Manufacturing Index, capacity utilisation rate, crude oil inventories, housing market index and speeches from two member of the Federal Reserve,

Good luck to all.