daytrading july 30 pre-market

Morning traders.

Market wrap:

Australian shares are primed to open at their strongest level in 10 weeks after a second night of substantial gains in the US and Europe on Friday in anticipation of central bank action this week.

The September SPI 200 futures contract rallied 47 points or 1.1% on Saturday morning to 4220, a level last seen in mid-May.

The Dow closed above 13,000 on Friday for the first time since May 7, rising 188 points or 1.46% to 13,076 as reports of a proposed meeting between European Central Bank President Mario Draghi and Bundesbank President Jens Weidmann raised hopes of a breakthrough in the European debt crisis. The S&P 500 surged 1.91% and the Nasdaq put on 2.24%.

An index of US stocks most exposed to economic growth jumped 2.1% as traders bet on possible stimulus moves when the Federal Reserve meets tomorrow/Wednesday and when the European Central Bank sits on Thursday. Expectations in Europe were heightened by renewed pledges from German Chancellor Angela Merkel and French President Francois Hollande to keep the euro-zone intact and from a French newspaper report that the ECB and EU are preparing to enter bond markets to reduce borrowing costs for Spain and Italy.

US stocks held on to their gains despite another round of weak economic news. GDP eased to 1.5% last quarter from 2% in the first three months of the year, marginally better than the 1.3% growth rate predicted by economists. Consumer sentiment deteriorated this month to its lowest level of the year.

"Between Draghi's comments [on Thursday] and the gross domestic product numbers today, we're bid up on prospects of monetary intervention," the chief investment strategist at Janney Montgomery Scott in the US told MarketWatch. "Once again today's news is being treated somewhat perversely, as weak means quantitative easing. The numbers weren't so bad to scare anybody, but not good enough for the Fed to stay on the sidelines."

Once again peripheral markets led the gains in Europe as Spanish and Italian borrowing costs continued to plunge from critical levels. Spain's IBEX 35 put on 3.91%, Italy's FTSE MIB 2.93%, Germany's DAX 1.62%, France's CAC 2.28% and Britain's FTSE 0.97%.

Renewed strength in the euro continued to help US dollar-denominated commodities. Oil improved for a fourth session but still finished 1.3% lower for the week following last Monday's 4% slide. On Friday West Texas crude for September delivery put on 87 cents or 1% at US$90.26 a barrel.

Copper rallied for a fourth night as industrial metals benefitted from expectations that some of the increased liquidity from central banks will find its way into commodities. In London, copper advanced 1.3%, aluminium 0.9%, lead 2%, tin 2.1% and zinc 2.4%. Nickel eased less than 0.1%. US copper for September delivery added four cents or 1.2% at US$3.44 a pound.

Gold edged up for third night. Gold for August delivery put on $7.70 or 0.5% to US$1,622.80 an ounce.

TRADING THEMES THIS WEEK

ALL EYES ON THE CENTRAL BANKS: There has been a recurring pattern in recent months of markets rallying ahead of central bank meetings in anticipation of what they might do and then falling away when the reality disappoints. We've enjoyed a nice pre-emptive bump over the last few sessions (and hopefully today) but the market will need to see some real action from the Fed and ECB this week for the rally to continue. The central banks won't necessarily have to announce specific measures, but will need to hint at further bond purchases or similar if recent market gains are not to fritter away. The Fed releases its policy statement on Wednesday night and the ECB hold its monthly press conference on Thursday.

CHINESE MANUFACTURING: The first day of the new month brings July manufacturing data from the biggest consumer of Australian raw materials. The government's official manufacturing index and HSBC's private final manufacturing index are both accompanied on Wednesday with some optimism after the "flash" or preliminary reading from HSBC surprised to the upside. Economists are now predicting a modest improvement in the official gauge from 50.2 in June to 50.4 this month.

US EARNINGS WEEK 3: More than half the S&P 500 have reported during what appears to be the weakest quarterly earnings season since 2009. Sales have beaten analysts' expectations at just 43% of companies, but the index performances show the market has taken it all in its stride. Among the highlights this week are expected to be Pfizer, MasterCard, Kraft Foods and Procter & Gamble.

ECONOMIC NEWS: A solid schedule of domestic data this week includes: new motor vehicle sales (today); building approvals, private sector credit (tomorrow); manufacturing index, house price index (Wed); retail sales, trade balance (Thu); and services index (Fri). A busy week in the US includes: personal income, consumer spending, Chicago PMI, consumer confidence (tomorrow); ISM, construction spending, motor vehicle sales, Fed policy statement (Wed); weekly jobless claims, factory orders (Thu); and non-farm payrolls, unemployment and services ISM.

Good luck to all.