daytrade diaries... november 5

Morning traders.

Market wrap: Australian stocks are primed for a positive open despite a strong rally on Wall Street fizzling out in the last hour of trade.

U.S. stocks were well ahead for most of the session but handed back much of the gains late on a day when the Federal Reserve announced it had held interest rates steady and would keep them low for some time to come. The Dow surrendered a triple-digit gain to close 30 points or 0.31% higher, the S&P 500 rose 0.1% and the Nasdaq ended 0.09% lower.

"The Fed is wanting to not rock the boat at the moment and wants to make sure the economy is on very firm footing before any overt attempt is made to raise rates and deal with the inflationary pressures down the road," said a portfolio manager quoted on MarketWatch. "It means we'll still have a fair amount of liquidity moving around and the market should remain pretty stable if not grind slightly higher in the near term."

Other U.S. economic indicators were mixed. A measure of service sector activity came in below expectations but still showed some growth. Private sector jobs declined but less than last month. Redundancies by U.S. companies last month fell to the lowest reading since March 2008.

It was another solid night for American resources-related companies as financial stocks again lagged. Gold/silver miners rallied 0.78% and oilers 0.48%. The S&P Bank Index tanked 2.74%, REITs 2.39% and transport stocks 1.62%.

Earlier, European markets bounced back from Tuesday's sell-off. Britain's FTSE rose 1.4%, Germany's DAX 1.7% and France's CAC 2.4%.

Gold rallied after the Fed confirmed that bank interest rates will stay low for some time. The spot price was trading recently at $1092.70, a rise of more than $8. Crude oil benefitted from a softening US dollar and an unexpected drop in US inventories on signs of improving demand. Crude was recently trading at $80.18, up 1%.

Base metals prices drifted lower as traders continued to fret about demand uncertainty and high stocks in London Metal Exchange warehouses. In London, aluminium slipped 0.78%, copper 1.83%, lead 1.22%, nickel 0.89%, tin 0.51% and zinc 0.46%.

At 7 am, futures traders had priced in a 50 point bounce in our market today but by the close it had dwindled to 23 points. The SPI futures index closed at 4544.

TRADING THEMES TODAY

DISAPPOINTMENT: For a while this morning it looked like the U.S. was ready to bounce strongly - today at least. But that final-hour sell-off is yet another sign that global markets are on shaky ground. Caution remains essential until world markets find a solid footing.

GOLD: For a second session, the one real bright spot in the overnight action was the world's favourite precious metal. Low interest rates in the US for the foreseeable future should support gold at current prices and help our gold sector enjoy another good session.

ECONOMIC NEWS: Balance of trade figures are due at 11.30 am. RBA governor Glenn Stevens is due to make a speech tonight at 7.55 pm. There are interest rate decisions due tonight from European and British central banks - no changes expected. In the US: unemployment claims, productivity data and chain store sales.

Good luck to all.