Daytrading March 19 pre-market

Morning traders. Thanks Shelby and after-market regulars.

Market wrap:

Shares look set to rally after a reprieve on interest rate rises sent US stocks and the Australian dollar sharply higher, offsetting a slump in iron ore.

The March SPI 200 futures contract, which expires today,  advanced 27 points or almost 0.5% to 5880 as US investors welcomed signs that the Federal Reserve is unlikely to lift its key lending rate from a record low as soon as expected and that the pace of increases will be slower than first indicated.

The S&P 500 closed 25 points or 1.21% ahead after being underwater for most of the session ahead of the Fed's policy statement and press conference. The Dow put on 227 points or 1.27% and the Nasdaq 46 points or 0.92%.

The Fed dropped the word "patient" from its rate policy guidance but said recent weakness in economic data meant it will not raise the funds rates until it has “seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2% objective over the medium term”. A "dot plot" which indicates where Fed officials think the funds rate will be was adjusted so that the median forecast in December is for a rate of 0.625%, down from previous indications for a rate of 1.125%. Projections for next year were also lowered to reflect a later start and slower pace of increase. Read more here.

“There’s not enough time between now and June to say inflation expectations have bottomed out, which probably pushes you out to September,” John Canally, chief economic strategist at LPL Financial in the US, told Bloomberg. “The statement about the economy softening a bit raises the market’s awareness that the economy is under-performing where the Fed wants it to be, which pushes them out.”

The US dollar index sagged 2.61% from a 12-year high, relieving pressure on dollar-denominated commodity prices. The Australian dollar surged 2.4% or more than a cent and a half against the greenback, lately buying 78.01 US cents.

All 10 industry groups rallied, with utilities and energy stocks leading. Utilities, valued for their dividends in times of low interest rates,  have come under pressure over the last few weeks in expectation that rate rises were likely to start as soon as June. The energy sector bounced 2.8% as the slump in the dollar sparked a scramble into crude oil, despite news that US inventories rose for a 10th straight week last week. West Texas Intermediate crude oil for April delivery settled $1.20 or 2.8% ahead at US$44.66 a barrel and was lately higher still at US$45.02.

A relief rally drove the NYSE Arca Gold Bugs index up 4.47% as traders bought gold to offset weakness in the US dollar. Gold for April delivery settled $3.10 or 0.3% higher at US$1,151.30 an ounce ahead of the Fed policy statement and was lately trading at US$1,173.50.

Australia's largest miners shrugged off a plunge in iron ore and weakness in base metals following weak Chinese housing news. BHP rallied 2.38% and Rio Tinto 0.92% in US trade. Spot iron ore for import to China yesterday slumped $3.10 or 5.4% to a new six-year low at US$54.50 a dry tonne. Read more here.

Lead and tin hit 57-month lows and nickel the lowest point in 14 month as base metals wilted following news that Chinese house prices fell sharply last month. In London, copper dropped 2%, aluminium 1.3%, lead 2.1%, nickel 1.6%, tin 2.9% and zinc 1.3%. US copper for March delivery was recently off 0.6% at US$2.63 a pound.

TRADING THEMES TODAY

PARTY ON, DUDES: Your host, Janet Yellen, just refilled the punch bowl. The police sirens you have been hearing drawing closer have now receded into the distance - the party is not breaking up. Abandoning the metaphor, the Fed has taken note of the recent run of soft US economic data and concluded that the economy is not quite strong enough to withstand higher rates, so they'll delay a few months longer. The reaction was joy in the stock market, tempered by the suspicion that the weakness the Fed sees in the economy is likely to be reflected in stock valuations sooner or later. The US dollar plunged. Gold, oil, stocks and government bonds rallied. We should see gains today but they will likely be capped by profit-taking among US investors who just saw a 2.4% improvement in their Australian portfolios from currency changes. There are also Chinese concerns - iron ore and base metals had pretty grim sessions.

ECONOMIC NEWS: The quarterly RBA Bulletin is due at 11.30am EST. Tonight's US highlights are weekly jobless claims, current account, Philly Fed Manufacturing Index and a leading index.

Good luck to all.