Daytrading July 21 pre-market

Morning traders. Thanks Trees.

Market wrap:
Shares will look to extend Friday's recovery after upbeat corporate earnings helped Wall Street rebound from its worst session in three months.

The September SPI 200 futures contract rallied 22 points or 0.4% to 5507 after BHP and Rio Tinto joined a broad recovery in the US as traders discounted the market risk from Thursday's shooting down of a Malaysian Airlines passenger jet over Ukraine and Israel's ground incursion into Gaza.

“When all these things hit the headlines, there’s a knee-jerk reaction for the day,” Jim Paulsen, chief investment strategist at Wells Capital Management in the US, told Bloomberg. “This is a terrible tragedy, but the odds of it developing into something that’s going to be a sustained market event are fairly low. You get a lot of investors coming in today and taking advantage of opportunities in the sense of having a re-priced market yesterday.”

The S&P 500 bounced 20 points or 1.02%, recouping almost all of Thursday's decline, the index's heaviest loss since April. With Internet and biotech stocks leading market gains, the Nasdaq put on 69 points or 1.57%. The Dow trailled with a gain of 123 points or 0.73%.

A well-received earnings report from Google fuelled the rally in tech stocks. Shares in the world's third largest company by market capitalisation jumped 3.72% after the internet giant reported revenue growth of 22% last quarter. The company expects to have more than a third of the total global digital ad spend this year. Other earnings were mixed. Shares in GE and AMD sold off but earnings from regional bank Huntington Bancshares bolstered confidence in financials.

An index of leading economic indicators pointed to further improvement in the US economy in the months ahead. The Conference Board index rose 0.3% last month to 102.2, the index's fifth straight improvement. A separate report showed consumer sentiment has fallen to a four-month low this month. The UMich/Reuters preliminary measure fell to 81.3 from 82.5 in June.

Australia's biggest miners clawed back some of Thursday's losses. BHP rallied 0.84% and Rio Tinto 0.21% in US trade. Spot iron ore for import to China on Friday eased 90 cents to US$96.60 a dry tonne.

An index of US gold miners fell 0.3% as demand for havens dried up, dragging the metal lower. Gold for August delivery dropped $7.50 or 0.6% to settle at US$1,309.40 an ounce before ending the week at US$1,311.40.

Oil also gave back a little of Thursday's surge, fulled by speculation about further sanctions against Russia, a major energy supplier. West Texas Intermediate crude oil for delivery in August declined six cents to settle at US$103.13 a barrel and ended the week at US$102.88.

Copper led a retreat in base metals after a second straight monthly decline in Chinese property prices raised concerns about the demand outlook. In London, copper fell 1.13% to a two-week low, nickel lost 2.81%, aluminium 0.4%, lead 0.14% and zinc 0.39%. Tin closed flat. US copper for September delivery dropped 0.95% or three cents to US$3.19 a pound.

"We are increasingly worried about China's property market. New dwelling commencements are down 18.6% year on year in the first five months, the sharpest decline since 2009," analyst Matt Fusarelli of AME Group told Reuters.

European stocks pared sharp opening losses as traders began to discount events in Ukraine and Gaza. The Stoxx Europe 600 index lost 0.02% as Germany's DAX fell 0.35%, France's CAC bounced 0.44% and Britain's FTSE gained 0.16%.

The dollar rallied about a quarter of a cent this morning to 93.95 US cents.

TRADING THEMES THIS WEEK

UKRAINE/GAZA: Both geopolitical events were quickly discounted on Friday and are unlikely to have much impact this week unless there is a major change in circumstances. Where the market used to take days, weeks or even months to absorb a 'black swan' event, the timeframe now is generally measured in minutes and hours unless the economic damage is extensive and obvious. The Ukraine crisis is unlikely to have that economic impact unless severe sanctions are brought in against Russia or the conflict broadens. Likewise, Gaza is a sideshow unless the conflict broadens.

US EARNINGS: A quarter of the companies on the S&P 500 are due to report this week, including Apple, Facebook, Amazon, Microsoft, Boeing and Caterpillar. The early earnings have been solid enough to sound no alarm bells, so there appears little reason why Wall Street will not continue its erratic upward trajectory.

CHINA-WATCHING: Thursday is a key day for our biggest trading partner with the release of preliminary July factory data. The recent improvement in activity is expected to continue with an improvement in the manufacturing PMI to 51.2 from a final reading last month of 50.7.

ECONOMIC NEWS: A light week for domestic news includes a speech by RBA Governor Glenn Stevens tomorrow and quarterly consumer inflation data on Wednesday. US highlights this week are: consumer price index/core CPI, existing home sales (tomorrow night); new home sales, weekly jobless claims (Thu); and durable goods orders (Fri).

Good luck to all.