Daytrading September 28 pre-market

Morning traders. Thanks Shelby and weekend regulars.

Market wrap:

A subdued start to the trading day appears likely following a mixed close on Wall Street as a rout in biotechs overshadowed gains in other sectors.

The December SPI200 futures contract eased four points or 0.1% to 5028 as BHP and Rio Tinto settled near six-year lows in the US and copper capped its worst week in eight months with another loss.

The three major US equity indices ended with wide disparities, reflecting their exposure to biotechs and an upbeat earnings report from Nike. While the Dow, which counts Nike as a component, rallied 113 points or 0.7%, the biotech-heavy Nasdaq dived 48 points or 1.01%. The S&P 500 closed in the middle with a loss of less than a point or 0.05% for a weekly deficit of 1.4%.

All three indices began the session with healthy gains after Federal Reserve Chair Janet Yellen used a speech on Thursday night to reassure investors that the US economy is strong enough to weather a rate increase before the end of the year. The S&P 5oo rallied as much as 22 points before selling in biotechs and health stocks turned into a full-blown plunge after lunch.

The iShares Nasdaq Biotechnology ETF cratered 4.9% to its heaviest loss since April 2014. The loss sealed the fund's worst week in seven years, dragging it into a technical bear market, defined as a decline of at least 20% from its 52-week peak.

"A sell-off in biotechs took the wind out of the rally. And in this low-volume environment traders are selling first and asking questions later,” Ryan Larson, head of equity trading at US RBC Global, told MarketWatch.

The broader S&P 500 health care industry group fell 2.7%. The retreat came as analysts questioned inflated valuations in one of the strongest-performing sectors during the bull market since 2009.

"Biotech has attracted a lot of performance-chasing investors over the last couple of years, both on the retail and institutional side," Armored Wolf Managing Director Bradd Kern told CNBC. "Retail money has flooded into the ETF, and institutional investors have talked themselves into overweight positions without any consideration of fundamental investing principles, namely valuation."

Nike accounted for about half of the Dow's gains, jumping 8.89% after reporting strong growth in Chinese revenue. The news helped steady nerves over the recent slowdown in the Chinese economy.

Also helping sentiment, US economic growth over the second quarter was revised higher to 3.9% from a prior reading of 3.7%. The final take on consumer sentiment this month was also upwardly revised, to 87.2 from a preliminary reading of 85.7.

Australian iron ore giants BHP and Rio Tinto closed a choppy US session near their August six-year lows. BHP shed 1.3% and Rio 1.23%. Spot iron ore for import to China slid 60 cents to US$56.20 a dry ton.

London copper ended its worst week since January with a loss of 0.6% on Friday for a weekly decline of 4.3% ahead of a week-long Chinese holiday starting on Thursday. London aluminium gave up 0.8%, lead 1.9%,tin 0.7% and zinc 2.6%. Nickel improved 0.8%. US copper for December delivery declined 0.9% to US$2.28 a pound.

The NYSE Arca Gold Bugs index eased 1.37% as the prospect of higher rates in the US dampened appetite for alternatives to the US dollar. Gold for December delivery settled $8.20 or 0.7% lower at US$1,145.60 an ounce.

Oil ended a positive week on an upswing as Yellen's outlook on the economy offered hope for higher energy demand. West Texas Intermediate crude oil for November delivery settled 79 cents or 1.8% ahead at US$45.70 a barrel.

European markets closed with substantial gains before the biotech-wreck cruelled Wall Street's rally. The Stoxx Europe 600 put on 2.84%, Germany's DAX 2.77%, France's CAC 3.07% and Britain's FTSE 2.47%.

The dollar was this morning buying 70.32 US cents.

TRADING THEMES TODAY

TIP-TOEING ON THIN ICE: Mixed leads from Wall Street offer the ASX minimal direction this morning. Friday's negative close and a generally downbeat week last week offer room for a partial recovery today, but it's meaningful that the index can't manage a convincing move away from this danger zone. Although support around the 5000 mark has survived four tests, the index keeps setting lower highs. Something has to break. Wall Street has another quarterly earnings season on the horizon, plus the prospect of another bruising political stand-off over government funding and potentially another government shutdown before year-end. The deterioration in sentiment towards biotechs in the US has had minimal impact here so far, but may start to bite if valuations begin to take precedence over blue sky. Potentially that could also negatively impact the recent focus here on apps/software.

ECONOMIC NEWS: No significant domestic news scheduled today. A busy start to the week tonight in the US includes speeches by no fewer than four Fed officials, personal spending and income, pending home sales and the core price index.

Good luck to all.