daytrading oct 18 pre-market

Morning traders.

Market wrap: Stocks are set to reverse yesterday's gains at today's open after Germany quashed hopes for a swift resolution to the European debt crisis.

The December SPI futures contract ended the night session 70 points or nearly 1.7% weaker at 4214 as US and European stocks fell and key commodities pared recent advances.

Benchmark indexes in the US lost around 2% as a regional US manufacturing index missed targets and a revenue decline from Wells Fargo weighed on the financial sector. The S&P 500 gave back 1.94% as profit-taking set in following a two-week rally of up to 14%. The Dow lost 247 points or 2.13% and the Nasdaq 1.98%.

European markets declined, with key banks suffering big losses after a spokesman for German Chancellor Angela Merkel dismissed hopes that this weekend's euro-zone summit meeting will deliver a comprehensive plan to contain the sovereign debt crisis. The spokesman said discussions would likely drag into next year. Britain's FTSE eased 0.54%, Germany's DAX 1.81% and France's CAC 1.61%.

"Part of this rally over the last two weeks was fuelled by the expectation of a new-found sense of urgency among policy-makers in the euro-zone, so this morning's comments to some degree countered that growing belief that things were going to get better," an equity market strategist at Federated Investors in the US told MarketWatch. "The bigger picture is we just had a terrific rally, with the S&P 500 Index up about 14% in the last two weeks, so investors decided to take a deep breath and lock some profits in."

It was a bad night to report earnings in the US, with Wells Fargo hammered following a decline in revenue and an initial rally in Citigroup fading to a loss. An index of manufacturing in the New York region improved from -8.8 to -8.5 but fell short of expectations for a rise to -4.

A rise in the US dollar dragged on commodities as wary traders once again dumped the euro. Crude oil for November delivery was recently off 34 cents or 0.4% at US$86.46 a barrel.

Most industrial metals rolled over as the decline in equities accelerated. In London, copper lost 1.1%, aluminium 0.9%, lead 2%, tin 1.4% and zinc 1.35%. Nickel advanced 0.5%. US copper was recently off 1.8%.

Gold and silver gave back some of last week's gains as an improving US dollar reduced demand for alternative investments. Gold for December delivery was recently off $10.80 or 0.6% at US$1,672.70 an ounce. December silver declined 34 cents or 1% to US$31.84 an ounce.

"I see a listless market," Michael Smith of T&K Futures in the US told MarketWatch. "One day [European officials] have a plan, one day it kind of falls apart. Less and less people are trading, and that trend will continue until we have fundamental news."

TRADING THEMES TODAY

PROFIT-TAKING: The market has enjoyed an exceptional run lately, so it's no great surprise to see some profit-taking in the US and Europe. It's also no surprise to see Germany "manage downwards" heightened expectations for this weekend's summit meeting. What matters now is whether this is just a pause in the recent upswing or evidence of a top. Time will tell. In the meantime, there is no shortage of potential mood-changing news during trading hours today (see below).

IBM EARNINGS: Technology bellwether stock IBM was due to deliver its third-quarter earnings report shortly after the close of regular trade on Wall Street this morning. These early results are important for setting the tone of the US earnings season and a well-received report here could change the outlook for our trading day. Check US futures for the reaction.

INTEREST RATE OUTLOOK: The minutes from the last Reserve Bank rate-setting meeting are due at 10.30am AEST and should offer some insight into central bank thinking on the next move. Any hint of a cut would likely be well received.

CHINESE GROWTH: Third-quarter GDP figures from China are due at noon AEST and will be closely analysed for weakness. The consensus expectation is for a moderate decline in the pace of growth from a robust 9.5% last quarter to a not-much-less robust 9.3%. Industrial production and retail sales are also due for release at the same time.

ECONOMIC NEWS: The minutes from the last Reserve Bank monetary policy meeting are due at 10.30am AEST (see above). Chinese growth figures and other data are due at noon (see above). Euro-zone economic sentiment and British inflation figures are due tonight. The US diary includes the producer price index and core PPI, long-term purchases, housing market index and a speech by Federal Reserve Chairman Ben Bernanke.

Good luck to all.