Daytrading September 16 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

Stocks look set to recoup most of yesterday's sharp loss at the open after Wall Street rallied as tepid economic data raised hopes that US rates will remain on hold tomorrow.

The September SPI200 futures contract, which expires tomorrow, surged 56 points or 1.1% to 5062 as Wall Street shrugged off a second straight heavy decline in Chinese shares yesterday.

The S&P 500 rallied 25 points or 1.28% to its highest point in more than two weeks. The Dow added 229 points or 1.4% and the Nasdaq 55 points or 1.14%.

“Today’s rally is for all the wrong reasons. Retail sales were disappointing, but the market is probably interpreting it as one more sign that might force the Fed to delay interest rate hikes,” Ryan Larson, head of equity trading at RBC Global Asset Management in the US, told MarketWatch. “Markets should applaud a rate hike in September as it would mean the economy is doing well and can withstand a small move. A 25 basis point increase would still leave the policy very accommodative. However, how markets should react and how they actually do is not always the same.”

The odds on the US Federal Reserve raising rates for the first time in nine years tomorrow night stood at 30% after August retail sales and industrial production reports missed expectations. Retail sales increased by 0.2% last month, less than the 0.3% increase anticipated by economists. Industrial production declined 0.4%, double the expected drop.

"There's a big camp out there that [believes] any negative news is going to keep the Fed on hold. They focus on the near-term rather than the big picture," Robert Pavlik, chief market strategist at Boston Private Wealth, told CNBC.

Chinese concerns continued to recede, even after the Shanghai Composite skidded 3.52% yesterday, helping to drag the ASX 200 down 1.53%. Trading volumes in China hit seven-month lows after the market regulator announced on Monday it had closed thousands of illegal trading accounts. Read more here.

European markets turned higher with Wall Street after being off as much as 0.5% as a gauge of German economic sentiment plumbed 10-month lows. The Stoxx Europe 600 gained 0.79%, Germany's DAX 0.56%, France's CAC 1.13% and Britain's FTSE 0.87%.

US energy stocks rebounded with crude after the White House refused to back a move to repeal a 40-year ban on US oil exports. The energy ETF rose 1.11% after West Texas Intermediate crude oil for October delivery settled 59 cents or 1.3% higher at US$44.59 a barrel.

Australia's biggest miners closed mixed as iron ore declined for a second day. BHP gained 0.23% and Rio Tinto lost 1.44% in US trade. Spot iron ore for import to China yesterday fell $1.10 to US$56.40 a dry ton.

Base metals closed mixed as this week's 6% decline in Chinese equities dampened buyer interest. London copper reversed losses late in the session to advance 0.7%. Lead gained 0.7% and nickel 1.8%. Aluminium declined 0.5%, tin 0.2% and zinc 0.8%. US copper for December delivery was recently up 0.9% at US$2.43 a pound.

A modest rise in the US dollar helped push gold lower. Gold for December delivery settled $5.10 or 0.5% in the red at US$1,102.60 an ounce. The NYSE Arca Gold Bugs index eased 0.24%.

The dollar was this morning buying 71.43 US cents.

TRADING THEMES TODAY

THE CIRCLE GAME: The best quote I read last night said: “Ahead of what looks like the most vital Fed meeting in years, the best thing for markets to do would be simply to sit still and wait for Thursday afternoon. With that being impossible, they have opted for the second choice, namely running around in circles.” Take a bow, Chris Beauchamp, senior market analyst at IG. The ASX certainly did not mark time yesterday, but it looks like it will circle back towards something nearer 'neutral' today. China cast a long shadow here yesterday, but barely warranted a mention in the overnight 'Wall Street' round-ups. Commodities were mixed overnight. Unfortunately, the recent volatility has taken its toll on the speculative end of the market - my 'hot' list seems to get shorter each day.   

ECONOMIC NEWS: RBA Assistant Governor Guy Debelle is due to deliver a speech on "Some Current Issues in Financial Markets" at 9.30am EST. The August leading index is due at 10.30am. Tonight's US highlight is the consumer price index/core CPI. Also due: crude oil inventories, long-term purchases and housing market index.

Good luck to all.