Daytrading October 22 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

Australian shares are pointing lower after a biotech scandal and weakening commodity prices helped drag Wall Street into the red overnight.

The December SPI200 futures contract declined 36 points or 0.7% to 5203 as BHP, Rio Tinto, oil and most metals fell.

The Nasdaq and S&P 500 slumped after a short-seller's attack on leading biotech Valeant fuelled a sell-off across the  health sector. The S&P 500 shed 12 points or 0.58% in volatile action and the biotech-heavy Nasdaq 41 points or 0.84%. The Dow was cushioned by well-received earnings from Boeing, easing 48 points or 0.28%.

The health care sector plunged as much as 2.5% before a partial rebound after short-seller Citron Research published accusations that Valeant Pharmaceuticals inflated profits by selling to a subsidiary. The report sent Valeant down as much as 40% before a denial from the company helped halve the final loss to 19.55%. Read more here. The sell-off spilled into other biotechs and helped drive the iShares Nasdaq Biotechnology Index down 0.49% and the Russell 2000 index of small caps 1.57%.

“We were looking for biotech and health-care as a form of leadership to stabilise the market and this news certainly doesn’t help,” Andrew Burkly, head of institutional portfolio strategy at Oppenheimer in the US, told Bloomberg. “That was the component we were missing on the rally and this sets that back.”

The ructions in health care overshadowed well-received quarterly earnings updates from Boeing and General Motors, and negative reactions to reports from Yahoo!, Coca-Cola and Chipotle. IBM hit a five-year low after announcing a 14th straight decline in quarterly revenue yesterday.

The US dollar index's highest level in eight sessions pressured dollar-denominated commodity prices and resource stocks. BHP dropped 0.72% and Rio Tinto 0.91% in US trade. Spot iron ore for import to China yesterday eased 20 cents to US$51.90 a dry ton.

Copper led a retreat on the London Metal Exchange amid reports that a short-covering rally has faded and funds resumed selling. Read more here. London copper slid 0.5%, aluminium 1.9%, lead 2.4%, nickel 1.2%, tin 0.3% and zinc 2.2%. US copper for December delivery was recently down 0.4% at US$2.36 a pound.

The US energy ETF sagged 1.2% as oil settled near a three-week low. West Texas Intermediate crude oil for December delivery shed $1.09 or 2.4% to settle at US$45.20 a barrel after the US Energy Information Administration announced US inventories increased by almost three times as much as analysts expected last week.

Gold stocks dived 4.01% as gold settled at its lowest price in more than a week. Gold for December delivery settled $10.40 or 0.9% weaker at US$1,167.10 an ounce.

Earlier, Europe's benchmark index closed little changed ahead of tonight's European Central Bank policy meeting. The Stoxx Europe 600 dipped less than 0.01% as Germany's DAX rallied 0.89%, France's CAC 0.46% and Britain's FTSE 0.05%.

The dollar was this morning buying 72.12 US cents.

TRADING THEMES TODAY

RETRACE DEVELOPING: It's hard to know how much weight to attach to last night's Wall Street action, when so much of the selling pressure seems to have come from a report from a company with a financial interest in driving a particular stock lower. Nonetheless, it's clear that the recovery in US stocks has stuttered over the last week and the indices may need to step backwards before they move higher. Earnings seasons are always choppy, but this one seems particularly downbeat. A soft night for commodity prices looks likely to weigh on the ASX today.

ECONOMIC NEWS: NAB publishes quarterly business confidence data at 1.30am EST. Tonight's US menu includes weekly benefit claims, existing home sales, consumer confidence, house price index and a leading index.

Good luck to all.