daytrading sep 23 pre-market

Morning traders.

Market wrap:

Wall Street's biggest decline this month points to a soft start to the Australian trading week ahead of the release of Chinese factory data this morning.

The December SPI 200 futures contract fell 23 points or 0.4% to 5246 on Saturday morning as political wrangling in Washington and mixed messages from Federal Reserve officials fuelled a steep sell-off during Friday's "quadruple witching" session in the US. Oil and metals also retreated.

The S&P 500 sagged 12 points or 0.72% in heavy trade for its largest one-day loss since August 27. The Dow slipped 186 points or 1.19% as institutional indexes prepared for
Visa, Goldman Sachs and Nike to replace Alcoa, Hewlett-Packard and Bank of America on the blue-chip index at the close of trade. The Nasdaq lost 0.38%.

The indexes pared weekly gains after two Fed officials doused some of the euphoria over the central bank's decision to leave its stimulus program intact on Wednesday. St Louis Federal Reserve Bank President James Bullard said the long-awaited "taper" could start next month if economic data are strong enough. Kansas City Fed President Esther George, who voted in favour of tapering this month, said the Fed had damaged its credibility by failing to act.

Traders watched developments in Washington, where political division were hardening over the federal debt ceiling, due to be reached next month. The Republican-controlled House of Representatives on Friday voted to fund government spending until mid-December while denying financial support to President Obama's health-care law. The President said on the weekend he will veto the bill. Read more here.

Trading volumes were the highest since June for the "quadruple witching" session, which involved the expiry of four different kinds of derivative. Small caps escaped the worst of the selling with traders focussed on the big end of the market - the Russell 2000 declined 0.23%.

Declines in commodity prices impacted resource stocks. BHP lost 1.46% and Rio Tinto 2.47%. Gold miners Newmont and Barrick Gold tumbled 5.74% and 4.27%, respectively, after the metal gave up most of its post-Fed rally. Gold for December delivery dived $43.70 or 3.2% to end the week at US$1,325.60 an ounce. December silver also suffered a sharp reversal, falling $1.50 or 6.45% to US$21.79 an ounce.

Industrial metals also suffered declines, with copper backing off a one-month high. US copper for December delivery fell around four cents or 1.2% to US$3.31 a pound. In London, copper dropped 0.7%, aluminium 1.6%, lead 2%, nickel 2.5%, tin 1% and zinc 1.8%.

Oil fell to its lowest price in a month amid evidence that production in Libya and Iraq is improving. West Texas Intermediate crude for October delivery fell $1.72 or 1.6% to US$104.67 a barrel as the contract expired.

"The stars are aligning for a bearish [oil] market," Michael Lynch, president of Strategic Energy & Economic Research in the US, told Bloomberg. "Libyan and Iraqi production is rising, which will lead to greater supply. The Syrian and Iranian situations appear to be calming down, which is tapering the geopolitical premium a little bit."

Spot iron ore for import to China edged up 10 cents to US$131.80 per dry metric tonne.

The prospect of a weekend election in Germany capped risk appetite in Europe. Germany's DAX slipped 0.21%, France's CAC 0.05% and Britain's FTSE 0.44%.

TRADING THEMES THIS WEEK

US DEBT CEILING: It's tedious and we've been here many times before but it looks like the market will have to endure another round of squabbling in Washington over the federal borrowing limit. The Treasury is currently due to run out of funds by the middle of next month. If this budget battle follows the familiar script, we can expect plenty of sabre rattling in Washington and volatility on Wall Street until the Republicans and Democrats inevitably forge another of the unwieldy compromises that characterise Congress. The political stand-off is likely one reason why the Fed held off on a taper this month. Read more here.

FED WON'T SHUT UP: Fed-watchers are in for a treat this week with no fewer than nine speeches due this week from Federal Reserve officials. In addition, President Obama is due any time to announce his nomination to replace Ben Bernanke as chairman. The result may be that Fed-watching overshadows a solid diet of economic data this week, including consumer confidence, durable goods, revised GDP and consumer spending. See below for more detail.

GERMAN ELECTION: Traders looking for positives to start the week may welcome what looks a resounding victory for German Chancellor Angela Merkel over the weekend. Merkel's centre-right Christian Democratic Union appears on track for more than 42% of the vote and possibly the first absolute majority in Germany since 1957. The result maintains stability at the heart of the euro-zone and appears to be an endorsement of Merkel's hardline stance during the debt crisis. Read more here.

CHINESE GROWTH: The best chance of a market reversal today comes with the 11.45am EST release of HSBC's preliminary Chinese manufacturing report. The flash PMI is tipped by economists to improve to 50.9 from last month's reading of 50.1, according to Forex Factory. That would signal accelerating growth and provide a welcome counter-point to Friday's falls on Wall Street. The Shanghai Composite resumes trade today after a two-day public holiday at the end of last week.

ECONOMIC NEWS: The only release worth noting during an exceptionally light week for scheduled Australian economic data is the RBA Financial Stability Review on Wednesday. US highlights include: consumer confidence (tomorrow); durable goods orders, new home sales (Wed); revised GDP, weekly jobless claims (Thu); personal income, consumer spending and consumer sentiment (Fri).

Good luck to all.