Daytrading October 13 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

Australian stocks look set to open modestly lower for a second day after weakness in resource stocks offset slender gains in other sectors in light US holiday trade.

The December SPI200 futures contract declined 13 points or more than 0.2% to 5211 as crude oil turned sharply lower and BHP and Rio Tinto broke a nine-session winning run.

US stocks closed little changed near a seven-week high as the Columbus Day public holiday dampened trading volumes and catalysts. The S&P 500 hovered near break-even for much of the session before pushing to a gain of three points or 0.13%. The Dow rallied 47 points or 0.28% to a seventh straight gain. The Nasdaq added eight points or 0.17%.

"There's really not much going on today. It's really the calm before the earnings storm," Peter Boockvar, chief market analyst at The Lindsey Group in the US, told CNBC. "I've got my eye on commodity prices. The market's extremely overbought. I expect a big pause here."

Equity trading volumes were a fifth lower than the recent average as the US bond market closed for Columbus Day. With no major economic data or corporate earnings to provide direction, traders took their cues from commodity markets and the latest remarks by Federal Reserve officials. Volumes are expected to pick up after JPMorgan Chase gets a big week of financial earnings underway tonight. Bank of America and Wells Fargo report tomorrow night and Goldman Sachs and Citigroup on Thursday.

Federal Reserve Vice Chairman Stanley Fischer became the fourth official in recent days to indicate the central bank is still on course to raise its key rate by the end of the year. However, he said a hike was “an expectation, not a commitment”, due to headwinds from the global economy. Read more here.

The defensive utilities sector was the pick of the ten S&P 500 industry groups. Energy was the biggest drag following news that OPEC output increased last month. The US energy ETF lost 1.29% as West Texas Intermediate crude oil for November delivery settled $2.53 or 5.1% lower at US$47.10 a barrel. The decline in WTI was the largest in six weeks after OPEC announced that member countries increased production by 109,000 barrels a day last month to 31.57 million.

A nine-session winning run for BHP and Rio Tinto ended in the US following downturns here yesterday. BHP shed 1.85% and Rio Tinto 1.99% in US trade. Spot iron ore for import to China yesterday rose another 20 cents to US$55.70 a dry ton.

Most base metals extended Friday's strong gains but closed below their session peaks as the prospect of weak Chinese trade data later today capped buyer enthusiasm. London copper rose 0.5%, lead 1.6%, nickel 1.4% and zinc 0.4%. Aluminium fell 1.2% and tin 1.6%. US copper for December delivery was recently off 0.15% at US$2.41 a pound.

US gold stocks pulled back from a three-month high even as gold notched its highest settlement since July 6. The NYSE Arca Gold Bugs index dropped 3.58%. Gold for December delivery settled $8.60 or 0.7% ahead at US$1,164.50 an ounce.
  
Europe's longest winning run in three months ended as traders took profits after six days of gains. The Stoxx Europe 600 eased 0.28%, France's CAC 0.27% and Britain's FTSE 0.7%. Germany's DAX bucked the trend with a rise of 0.23%.

The dollar was this morning ahead for a ninth straight session, buying 73.63 US cents.

TRADING THEMES TODAY

COMMODITIES WOBBLE, CHINA: Tentative profit taking has set in this week following the best week on most global markets in months, if not years. Wall Street scratched out another overnight rise, although low holiday volumes reduce the significance of the session. Volatility has fallen away and markets are starting to resume something nearer 'normal' behaviour after weeks of substantial overnight swings. Crude oil was ripe for profit taking and fell through a trap-door after OPEC revealed low prices have had no impact on production. Other commodities look short-term over-extended and may follow suit, especially if today's September Chinese trade report is as grim as analysts expect. None of that is likely to have much impact on the speculative end of the market, which is still riding the buoyant mood from last week.   

ECONOMIC NEWS: September business confidence figures are due at 11.30am EST. Chinese trade data is due around lunchtime. A low-key night for economic data tonight in the US includes the small business index and federal budget balance.

Good luck to all.