Daytrading October 30 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

Australian shares look set to open lower for a fifth session after Wall Street pared Wednesday night's Fed-fuelled rally as economic data disappointed and key commodity prices fell.

The December SPI200 futures contract dropped 14 points or 0.3% to 5226 following declines in BHP, Rio Tinto, iron ore, gold, industrial metals and the Australian dollar.

US stocks logged mild losses as soft economic data capped enthusiasm for higher levels. The S&P 500 closed one point or 0.04% in the red at 2,090 after dipping as low as 2,083. The Dow shed 24 points or 0.13% and the Nasdaq 21 points or 0.42%.

“It’s merely a re-evaluation of how people should be positioned given the Fed commentary [on Wednesday night],” Michael James, managing director of equity trading at Wedbush Securities in the US, told Bloomberg. “The door was left open for a rate hike in December, which is likely to lead to a much higher dollar. That won’t be a good read for anyone doing business internationally.”

A night of downbeat economic data sharpened concerns that the Federal Reserve may raise its key rate at a time when the US economy is losing momentum. Economic growth slowed to 1.5% last quarter from 3.9% in the three months through to June. Economists had expected growth of around 1.6-1.8%.

There were further signs of strains in the housing sector, one of the main drivers of growth last quarter. Pending sales declined for a second straight month, falling 2.3% in September to its second weakest level of the year. A report earlier in the week showed sales of new homes sagged 11.5% during the same month. Read more here. Claims for jobless benefits ticked up by 1,000 to 260,000 last week but remained near their lowest level since 1973.

Health care was the pick of the industry groups, rising for a fifth day as the sector continued to heal from a sharp sell-off following a string of negative publicity involving biotechs. Utilities, financials and tech stocks were the biggest drags.

While the US dollar trimmed Wednesday's rally, most dollar-sensitive stocks and commodities took a hit. BHP shed 4.13% and Rio Tinto 2.29% in US trade as iron ore fell further below US$50 a ton. Spot iron ore for import to China yesterday declined 50 cents to US$49 a dry ton.

Gold and US gold stocks faded to three-week lows as the prospect of higher rates dulled the metal's appeal as an investment asset. The NYSE Arca Gold Bugs index slumped 3.69%. Gold for December delivery settled $28.80 or 2.5% weaker at US$1,147.30 an ounce.

Copper hit a three-week low as weak US economic data compounded fears about higher rates. In London, copper shed 1.4%, aluminium 0.9%, lead 1.8%, nickel 2.1%, tin 1.3% and zinc 2%. US copper for December delivery was recently down 1.8% at US$2.32 a pound.

"[The] Fed meeting outcome was bearish for metals. The market is positioning for a new leg lower in metals,"  Gianclaudio Torlizzi, managing director at consultancy T-Commodity in Italy, told Reuters. "So the scenario might be that of a stronger [US] dollar with a cooling economy, not the best scenario for risk assets."


Energy stocks rose as crude oil consolidated Wednesday's 6% rally. The US energy ETF gained 0.51%. West Texas Intermediate crude oil for December delivery jagged a gain of 12 cents or 0.3% to settle at US$46.06 a barrel.

Negative reactions to earnings reports from Barclays and Deutsche Bank helped check European markets. The Stoxx Europe 600 eased 0.03%, Germany's DAX 0.29%, France's CAC 0.1% and Britain's FTSE 0.65%.

The dollar was this morning buying 70.79 US cents.

TRADING THEMES TODAY

DOWNBEAT WEEK DRAGS TO A CLOSE: The XJO is delivering a disappointingly quick retest of last Friday's breakout, with the benchmark index finishing yesterday's session at around the level where we might expect it to find support. Wall Street pretty much marked time overnight, which is unlikely to be enough for a major rebound here today. International money likely exited our market yesterday on the expectation that a strengthening US dollar is going to pressure the little Aussie battler and commodity prices for some time to come. That could be a theme in the weeks/months ahead. One potential intraday game-changer late in the session: the Bank of Japan meets today and may announce more stimulus plans. More easy money in the financial system = possible stock rally. The release time varies by up to an hour from just before 2pm AEST.

ECONOMIC NEWS: Monthly private-sector credit data and quarterly producer inflation figures are due at 11.30am EST. The Bank of Japan is due to release a monetary policy statement at around noon Tokyo time (exact time can vary by up to an hour) or 2pm AEST. Tonight's US highlights are the quarterly employment cost index, core consumer price index, personal spending and income, Chicago PMI and revised consumer sentiment and inflation expectations.

Good luck to all.