Daytrading September 23 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

Australian stocks look set to re-test recent lows after a slump in commodities helped push European markets down more than 3% and drove Wall Street to a two-week low.

The December SPI200 futures contract dived 66 points or 1.3% to 5030 as copper suffered its biggest fall in more than two months and oil declined after Credit Suisse downgraded its price outlook for commodities and mining stocks. BHP and Rio Tinto both lost more than 3.5% in US trade.

The S&P 500 staged a partial recovery towards the end of the session to close 24 points or 1.23% lower after being down as much as 2% as traders battled fresh doubts over Chinese growth, day two of a biotech sell-off, the Volkswagen emissions scandal and declines in commodities. The fall was the index's third in four sessions, bringing up a two-week low. The Dow shed 180 points or 1.09% and the Nasdaq 72 points or 1.5%.

The global retreat began late in the Asian session after the ASX closed yesterday afternoon and peaked in Europe, where the Stoxx Europe 600 collapsed 3.12%. Car-makers were pummelled after France's Finance Minister called for an investigation into the industry following revelations that German manufacturer Volkswagen used software to cheat emissions testing. Germany's DAX gave up 3.8%, France's CAC 3.42% and Britain's FTSE 2.83%.

"Selling started [in] European hours where autos and materials/mining were hit. Selling was very technical in nature as prices failed at resistance and broke support. Market participants were quick to panic and sell breaks of minor support," Ilya Feygin, senior strategist at WallachBeth Capital, told CNBC. "In sectors, automakers and miners were very weak along with copper."

Chinese growth concerns flared up after the Asian Development Bank cut its Asian economic outlook and Credit Suisse lowered its expectations for commodity prices and resource stocks. The ADB downgraded its GDP prediction for Asia to 5.8% this year from an earlier outlook of 6.3%, and to 6% next year from 6.3%. Read more here.

Analysts pointed to lingering concerns about the Federal Reserve's failure to raise the federal funds rate last week: “It’s a hangover from last week’s Fed move. Yesterday [Monday] was just a little bounce,” Joseph Betlej, vice-president of Advantus Capital Management in the US, told Bloomberg.

The iShares Nasdaq Biotechnology ETF closed 1.47% in the red but off its lows following a second day of selling prompted by the threat of increased regulation in the aftermath of negative publicity over the weekend about dramatic hikes in the prices of medicines. A broader health care ETF shed 0.61%. Presidential candidate Hilary Clinton was due to announce new rules to rein in pricing following the close of US trade this morning.

The Bloomberg Commodity Index fell to its lowest point in almost a month as the Credit Suisse downgrade rippled through the market. Read more here. BHP declined 3.81 % and Rio Tinto 3.62% in US trade.

Copper tumbled 3.6% in London, its heaviest loss since July. London aluminium gave up 1.7%, lead 1.4%, nickel 1.7%, tin 2.3% and zinc 1.8%. Read more here. US copper for December delivery was recently down 3.45% at US$2.31 a pound.

The NYSE Arca Gold Bugs index dropped 5.5% as gold declined for a second night. Gold for December delivery settled $8 or 0.7% lower at US$1,124.80 an ounce as the US dollar index rallied for a second night amid growing expectations that US rates will rise before year-end.

Oil fell as much as 3% before paring its loss. West Texas Intermediate crude oil for October delivery settled 85 cents or 1.8% lower at US$45.83 a barrel.

Spot iron ore for import to China yesterday held steady at US$57.10 a dry ton.

The dollar was this morning buying 70.93 US cents.

TRADING THEMES TODAY

TESTING SUPPORT: Here we go again. A particularly ugly night on world markets has set up a fifth test of support around the psychologically-significant 5000 level. The XJO has held that line so far, but the fact we keep coming back to it is not a good sign for anyone with a longer-term investment focus. It looks like Monday's Wall Street bounce may have been a dead cat. Certainly last night was one of those sessions when the bad news just kept coming: Volkswagen's woes, biotech price scandal, Asian growth downgrade, commodity price/miner downgrades. If anything it's a positive that Wall Street finished as well as it did. Whether we bounce or break today may be determined by the September Chinese factory update due at 11.45am EST. A bad result there may be the straw that breaks; equally, a good result could give us the impetus to survive this re-test. Analysts are looking for the Caixin flash manufacturing PMI to improve to a dismal 47.6 from a slightly more dismal 47.3 last month.

ECONOMIC NEWS: The Conference Board's leading index is due at 10am EST, but the morning's potential market-mover is the September Caixin flash manufacturing PMI at 11.45am. The US also has manufacturing data to digest tonight, plus crude oil inventories and a speech by a Fed official.

Good luck to all.