Daytrading Oct 6 pre-market

Morning traders. Thanks Shelby and after-market regulars.

Market wrap:

The stock market is primed to open at its highest level in about a month after Wall Street sealed its longest winning run of the year with a fifth night of gains.

The December SPI200 futures contract rose 66 points or 1.3% to 5207, a level last seen on September 9, as the prospect of a delay in US rate hikes fuelled another strong session.

The S&P 500 rallied 36 points or 1.83% overnight to extend its five-day tally to 5.6%. The Dow put on 304 points or 1.85% and the Nasdaq 73 points or 1.56%. All three indices have moved out of correction territory since Friday's weak September jobs report slashed the odds that the Federal Reserve will increase its key interest rate this year.

“The Fed pushing out interest rate hike expectations to next year has been critical,” Michael Purves, chief global strategist at Weeden & Co in the US, told Bloomberg. “Today is simply a response to oversold conditions.”

All ten S&P 500 industry groups rose, with resource stocks leading for a second night. Both energy and materials rallied at least 2.5% amid reduced expectations for the US dollar if rates stay on hold for some time. BHP improved 1.94% and Rio Tinto 1.41% in US trade. Spot iron ore for import to China yesterday held steady at US$54 a dry ton.

The Nasdaq under-performed the other two major indices as a rebound in biotechs threatened to be short-lived. The iSbares Nasdaq Biotechnology Index, which bounced 3.47% on Friday, dropped 1.09% overnight.

A new quarterly US earnings season gets underway on Thursday with reports due this week from Alcoa and PepsiCo. Overall earnings for S&P 500 companies are expected to be down 3.9%, according to Reuters.

The night's only major economic report showed services activity expanded less than expected last month but remained at relatively high levels. The Institute for Supply Management's services index dropped to 56.9 from 59 in August, below the consensus of 57.5. Read more here.

European markets staged their biggest rally since August as a huge on-going recovery in Glencore boosted sentiment towards resource stocks. Glencore rallied 21.05% overnight to extend its five-day rebound to 65%. The Stoxx Europe 600 surged 3.01%, Germany's DAX 2.74%, France's CAC 3.54% and Britain's FTSE 2.76%.

The US energy ETF improved 3.02% as crude oil rallied in response to reports that Russia is willing to talk to other oil producers after previously resisting offers to discuss market share. West Texas Intermediate crude oil for November delivery settled 72 cents or 1.6% ahead at US$46.26 a barrel.

The NYSE Arca Gold Bugs index rallied 5.2% to its highest point in a month despite a directionless session in the precious metal. Gold for December delivery settled $1 or 0.1% higher at US$1,137.60 an ounce.

Copper rose as shorts covered positions and the recovery in Glencore helped improve sentiment. London copper rose 1.5%, aluminium 0.5% and tin 0.1%. Zinc shed 1.1%, nickel 0.8% and lead 1.1%. US copper for December delivery was recently up 1.4% at US$2.36 a pound.

The dollar was this morning buying 70.88 US cents.

TRADING THEMES TODAY

REBOUND UNDERWAY: The shorts scrambled to cover positions overnight as what a few days ago looked like a dead cat bounce in the US threatens to turn into a genuine reversal. It certainly feels like this rebound has more weight behind it than previous timid bounces. It's always dangerous to declare the worst is behind us but... I think the worst might be behind us. A new quarterly reporting season gets underway in the US on Thursday and earnings seasons tend to be market-supportive. With analysts expecting earnings to decline, there appears to be room for upside surprises. Back home, we have trade data at 11.30am EST and a Reserve Bank rate decision at 2.30pm, but no one expects the bank to announce any change.

ECONOMIC NEWS: August trade figures are due at 11.30am EST. The RBA releases a policy statement and rate decision at 2.30pm. Tonight's US highlights include trade data, consumer confidence and a speech by a Fed official.

Good luck to all.