daytrades april 7 pre-market

Morning traders.

Market wrap: A strong night for resources and cautious gains for US and European equities point to a modestly positive start to Australian share trade.

The June SPI futures contract ended the night session 4 points or 0.1% higher at 4945 after a rebound in industrial metals, a new record high for gold and a 31-year high for silver.

US stocks crept higher as institutional investors continued to position themselves ahead of the start of the quarterly earnings season next week. The Dow advanced 33 points or 0.27% to 12,427, its highest close since June 2008. The broader S&P 500 put on 0.22% to 1,336, 7 points short of its 2011 high, set in mid-February. The Nasdaq added 0.31%.

Traders shrugged off a stand-off in Congress that threatens to close down parts of the US government. Congressional Republicans are refusing to sign off on President Obama's budget plans after the current spending authority expires tomorrow.

"It's economic momentum versus policy uncertainty," a senior investment strategist at RidgeWorth Capital Management in the US told Bloomberg. "Investors are concerned about potential headwinds related to budget concerns, inflation fears and the impact of Fed policy going forward. That's weighing on the market as we approach the highs for the bull-market rally."

The political stand-off weighed on the US dollar overnight, encouraging hedges like gold and silver, and making dollar-denominated commodity prices more attractive for holders of overseas currencies.

Money continued to pour into safe havens, driving gold into record territory and silver closer to the US $40-an-ounce level. Gold for June delivery was recently up $8.70 or 0.6% at $1,461 an ounce. May silver was ahead 40 cents or 1.1% at $39.58 an ounce.

Yesterday's strong response on the Shanghai share market to this week's interest rate rise encouraged buyers back into industrial metals. Shanghai shares yesterday rallied 1.15% despite Monday's 0.25% rate increase. In London, copper rallied 2.4%, aluminium 1.2%, lead 0.9%, nickel 4.4%, tin 1.1% and zinc 0.6%. US copper was recently up 2.6%.

"The evidence to this point is that the Chinese rate hikes have kind of controlled things and slowed things down a bit, but they haven't had a material impact on demand for commodities in general," a partner at LOGIC Advisors in the US told Reuters.

An initial rally in oil was capped by a weekly US inventories report that missed expectations. Crude futures were recently up 30 cents or 0.3% at $108.64 a barrel after US government inventories increased more than analysts had predicted.

The major European markets were helped by a strong German manufacturing report. Britain's FTSE rallied 0.57%, Germany's DAX 0.55% and France's CAC 0.16%.

TRADING THEMES TODAY

TESTING RESISTANCE: Turmoil in the Middle East? Disaster in Japan? Ancient history, says the market. Less than two months later, shares are almost back where they were before any of that started. Despite pre-empting some of the overnight action yesterday, the XJO will open within striking distance of the 2011 closing high of 4938 set on February 17. What happens after that will likely depend on the reaction to news out of Europe this morning (see below). Mining should provide much of the strength today, thanks to solid overnight gains in gold, silver, oil and industrial metals. Copper had its sharpest rise in two weeks and nickel jumped more than 4%.

PORTUGAL ASKS FOR HELP: Reports came in after the close of US trade that Portugal has succumbed to the inevitable and asked the European Union for financial aid. The request has been expected since the government failed to secure support for its "austerity plan" in parliament. This development has been coming for such a long time that there is a very good chance that equity markets will barely blink. However, markets appear over-extended in the short term and this might be an excuse for a temporary pullback. It may pay to keep an eye on US futures today.

ECONOMIC NEWS: The monthly performance of construction index is due at 9.30 am, followed by the monthly jobs report at 11.30 am (unemployment rate and employment change). Jobs also top tonight's US schedule, which includes weekly jobless claims, consumer credit and natural gas storage. The European Central Bank is due to announce the new euro-zone interest rate, widely expected to increase by 0.25% to 1.25%.

Good luck to all.