Daytrading Oct 20 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

Shares are set to gap higher after Europe's best session in three years and upbeat US company earnings and economic data helped fuel a sharp rebound on Wall Street.

The December SPI 200 futures contract surged 68 points or 1.2% to 5305 as US stocks pared a fourth straight losing week on Friday.

A seven-year peak in consumer confidence and well-received quarterly earnings updates from General Electric, Morgan Stanley and Schlumberger helped the S&P 500 advance 24 points or 1.3%. The index rallied as much as 1.9% earlier as the Stoxx Europe 600 jumped almost 3%. Despite Friday's gains, the S&P 500 lost roughly 1% last week to extend its run of weekly falls to the longest since 2011. The Dow put on 263 points or 1.63% on Friday and the Nasdaq added 41 points or 0.96%.

“The disconnect between the sharp market drops this week and the pretty good US fundamentals might’ve gotten some people interested in buying again," John Canally, economic strategist at LPL Financial in the US, told Bloomberg.

Friday's recovery began in Europe, where a huge relief rally saw the benchmark index break its longest run of losses since 2003.The Stoxx Europe 600, which had declined for eight straight days leading into the session, soared 2.79% as Germany's DAX gained 3.11%, France's CAC 2.92% and Britain's FTSE 1.84%. The rebound followed reported claims by a board member of the European Central Bank that the bank is about to launch a new program to stimulate the flagging euro-zone economy.


Consumer sentiment in the US rose to a seven-year high this month, according to an initial reading from the University of Michigan and Thomson Reuters. The index edged up to 86.4 from 84.6 in September. However, commentators speculated that the final version may be much lower to reflect the impact of the Texas Ebola scare and volatility on Wall Street late in the month. A separate report showed housing construction picked up in line with expectations following a dip in August.

Traders focussed on the positives from a mixed bag of corporate earnings that included well-received reports from GE +2.35%, Morgan Stanley +2.12%. Honeywell +4.25% and Schlumberger +3.67%, and thumbs down for Google -2.54%, Urban Outfitters -14.29% and SanDisk -2.94%.

All ten S&P industry groups rallied, led by industrials, financials and health stocks. The Russell 2000 index of small caps missed the rally with a fall of 0.35% after making strong advances against the broader market trend earlier in the week.

BHP put on 0.54% and Rio Tinto 0.26% in US trade. Spot iron ore for import to China yesterday inched up 10 cents to US$80.60 a dry tonne.

Industrial metals reversed off multi-month lows, paring a week of heavy losses. In London, copper gained 1.34%, aluminium 3.08%, lead 1.02%, nickel 1.52%, tin 0.29% and zinc 1.26%. US copper for December delivery rallied 0.8% or more than two cents to US$3.01 a pound.

Gold ended a winning week modestly lower for the session as traders favoured riskier assets. Gold for December delivery retreated $2.20 or 0.2% to settle at US$1,239 an ounce on Friday but advanced 1.2% over the week.

Oil pared a third straight losing week with a slim rise on Friday. West Texas Intermediate crude oil for November delivery improved by five cents or 0.1% to settle at US$82.75 a barrel, barely denting a 3.6% weekly loss.

The dollar was this morning buying 87.55 US cents.

TRADING THEMES THIS WEEK

REBOUND BUILDING?: Another dismal week on world markets ended on a hopeful note with substantial gains in Europe and the US on Friday. Have we seen the bottom of this downswing? The ASX 200 has been behaving like a lot of traders think so. The index is already well off its low leading into today's session. Another 1%+ rally today would strengthen the case for the bulls. The VIX tumbled 12.74% on Friday and may have peaked on Wednesday. Small caps outperformed the broader market in the US last week, another indicator of improving risk appetite. The Russell 2000 index pre-empted the downturn on the wider market and is now pointing the way higher.

US EARNINGS: The quarterly profit season is now well into its stride and this week includes reports from the likes of Apple, IBM, Microsoft, Verizon, McDonalds, Yahoo, Amazon, General Motors, Ford, Boeing and Caterpillar. Tonight's session on Wall Street will be overshadowed by the reaction to market giant Apple's earnings report after the close of regular trade tomorrow morning Australian time.

BIG WEEK IN CHINA: Traders should get a clearer understanding of the pace of growth in Australia's most important trading partner this week following several months of mixed messages. Tomorrow brings the quarterly GDP report, plus monthly updates on industrial production, retail sales and fixed assets. Thursday brings the HSBC Flash Manufacturing PMI and Friday a leading index of economic indicators.

ECONOMIC NEWS: This week's domestic calendar includes: the minutes from this month's RBA meeting (tomorrow); quarterly consumer price index and trimmed mean CPI, twin leading indexes (Wed); and quarterly business confidence (Thu). US highlights include: existing home sales (tomorrow night); consumer price inflation/core CPI (Wed);  weekly jobless claims, flash manufacturing PMI (Thu); and new home sales (Fri).

This is the last pre-market wrap from me for a few weeks while I check in on family back in Scotland. The positions of temporary pre-market and afternoon thread-starters in the meantime remain vacant - any volunteers? Doesn't have to be much - just something to get the ball rolling. Think of how it will look on your resume...

Good luck to all.