Daytrading September 21 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

Uncertainty over the global economy drove US stocks sharply lower on Friday and points to a weak open to Australian trade this morning.

The December SPI200 futures contract retreated 76 points or 1.5% to 5072 after the Federal Reserve's decision to leave rates on hold fuelled 'risk-off' selling on both sides of the Atlantic. Trading in the US was the second heaviest of the year during a 'quadruple witching' session as four types of options and futures contracts expired and as Standard & Poor's adjusted component-company weightings on the benchmark index.

The S&P 500 slumped 32 points or 1.62% to erase its gain for the week. The Dow shed 290 points or 1.74% to re-enter a technical correction, defined as a decline of 10% from a 52-week high. The Nasdaq gave up 67 points or 1.36%. Both the Nasdaq and S&P 500 ended the session roughly 8% off their 2015 peaks.

The heavy sell-off came a day after the US central bank's Federal Open Market Committee voted 9-1 to leave the funds rate on hold, citing strains in the global economy and persistently low inflation in the US.

“By not raising the rates, the Fed is now fanning global growth fears,” Steven Wieting, global chief investment strategist at Citi Private Bank, told MarketWatch. “The key for future market action depends largely on whether or not the Fed had any good cause to worry about international developments.”

European equities slid as an initial surge in the euro against a retreating US dollar raised fears about the outlook for European exports. The Stoxx Europe 600 tumbled 1.78%, its biggest fall in almost three weeks. Germany's exporter-heavy DAX lost 3.06%, closing perilously close to a bear market, defined as a retreat of 20% from the index's April high. France's CAC shed 2.56% and Britain's FTSE 1.34%.

All ten S&P 500 industry groups declined, led by energy -2.6%, raw materials, financials and industrials. The Russell 2000 index of small caps dropped 1.47% to re-enter a correction. The Dow Jones Transportation Average cratered 2.18%.

“There’s some concern that the Fed sees something we’re not seeing in the data,” Eric Green, director of research and senior managing partner at Penn Capital in the US, told Bloomberg. “Some investors wanted them to rip the Band-Aid off and get the first one done. Then we wouldn’t have to obsess about it for the two weeks before each meeting.”

Oil suffered its biggest loss in almost three weeks as money flowed out of commodities and equities into US treasuries. West Texas Intermediate crude oil for October delivery settled $2.22  or 4.7% lower at US$44.68 a barrel amid concerns about the demand outlook if the US economy is not strong enough to withstand a modest rate rise.

Copper, sometimes dubbed the 'metal with the degree in economics', dived 2.7% in London and 2.9% in the US. London aluminium shed 0.7%, lead 1.7%, nickel 3%, tin 2.3% and zinc 2.2%. US copper for December delivery declined seven cents to US$2.38 a pound.

BHP gave up 2,2% and Rio Tinto 3.37% in US trade. Spot iron ore for import to China edged up 30 cents to US$57.10 a dry ton.

The NYSE Arca Gold Bugs index crept 1.35% higher as gold continued to benefit from haven-buying amid expectations of further weakness in the greenback. Gold for December delivery settled $20.80 or 1.9% ahead at US$1,137.80 an ounce, its highest level since September 1.

The dollar was this morning buying 71.88 US cents.

TRADING THEMES TODAY

BACK INTO LINE: Some misleading market cues sent the ASX and a few Asian markets higher on Friday in what turned out to be a misguided pre-empting of a Wall Street rally that never came. That leaves the index facing a sharp about-face this morning. After whinging for months about the prospect of a rate hike, Wall Street chucked a tanty when the hike did not come. If the Fed was worried about how the market would react to a rate rise, it knows now that the general feeling is that they should get on with it. Friday's reaction was exacerbated by quadruple witching and may turn out to be no more than a hissy fit. US futures may help improve the mood here later in the day, although Friday's action confirmed yet again that you can't place much faith in them. The spec market offered a few more opportunities last week, but will take time to ramp back up to the level of activity we saw earlier in the year.

ECONOMIC NEWS: No significant domestic news scheduled today. Existing home sales are a highlight tonight in the US, along with a speech by Federal Reserve Bank of Atlanta President Dennis Lockhart.

Good luck to all.