daytrades july 18 pre-market

Morning traders.

Market wrap: Australian shares are likely to open stronger for just the second day in six after corporate earnings helped US shares rally on Friday despite an impasse over the federal debt ceiling.

The September SPI futures contract closed 17 points or 0.4% stronger at 4458 on Saturday morning as oil, copper and gold all rallied.

The S&P 500 kicked higher in the final hour of a choppy session to close 0.56% stronger on the day but 2.1 lower for the week. The Dow added 43 points and the Nasdaq 0.98% as Google rallied 13% following the release of second-quarter earnings.

Energy stocks led the sector gains on the S&P as BHP's offer for Petrohawk Energy sent traders looking for other take-over candidates. The defensive health sector was the weakest.

The major indexes fluctuated between gains and losses as talks on raising the federal debt ceiling failed to make progress. Also weighing on sentiment was unexpectedly weak consumer sentiment, which plunged to a two-year low, a disappointing regional manufacturing report and a smaller-than-expected rise in industrial production.

Further softness in the US dollar helped gold continue its record run and other commodities advance. Gold rallied for a ninth straight session and has gained more than US$100 in that time. On Friday gold for August delivery added $5.20 or 0.3% to reach $1,594.50 an ounce.

Oil reversed Thursday's losses, rising nearly 2% on Friday for a weekly gain of 1.1%. "I suspect the budget talks in Washington DC are the main impact," the chief executive officer of energy-consulting firm Perry Management told MarketWatch. "There is a fear of default on national debt, which will cause a lower value of the dollar, and thus at least some money is going to commodities."

Industrial metals were mixed, with copper, zinc and lead improving and the rest losing ground. In London, copper added 0.6%, lead 1.9% and zinc 1.2%. Aluminium eased 0.3%, nickel 0.3% and tin 1.1%. US copper rallied 0.9%.

The major European markets closed mixed ahead of the release of the results of stress tests on European banks. Britain's FTSE fell 0.06%, Germany's DAX added 0.07% and France's CAC lost 0.66%.

TRADING THEMES THIS WEEK

US DEBT CEILING: Time is running out for a resolution to the political roadblock over the current US debt authority, which expires on August 2. Ratings agencies warned last week that failure to reach an agreement could force a short-term sovereign default, with consequences for the US's triple-A borrowing rating. Brinkmanship is nothing new in US politics, but the closer we get to the deadline, the more nervous markets will become. It's an unwelcome and unnecessary distraction during earnings season.

US EARNINGS SEASON WEEK 2: Week one of the second-quarter earnings season in the US was mostly positive but largely overshadowed by macro-economic events. If this week's focus swings back to corporate performance, these are some of the key results ahead: IBM, Halliburton (tonight); Apple, Bank of America, Goldman Sachs, Yahoo! (Tue); Intel, American Express, eBay (Wed); AT&T, Microsoft, Morgan Stanley (Thu); and Caterpillar, GE, McDonalds.

EUROPEAN BANK STRESS TESTS: European markets may be in for a choppy start to the week, with potential spill-over elsewhere, following Friday's release of the second round of "stress test" results on European banks. The problem is not so much that eight banks out of ninety failed the European Banking Authority's criteria, but that there was enough detail released for many commentators to conclude the tests are not rigorous enough to offer any comfort. Many of Europe's beleaguered banks do not appear to have enough capital to withstand a significant economic downturn. What was widely seen as a PR exercise may backfire by providing fund managers with more reason to sell than they had before.

GOLD: Nine rises in nine sessions is an impressive performance by any benchmark. Is there more to come? Well, US politicians seem in no mood to compromise over the debt ceiling and Europe's sovereign debt problems are far from over.

ECONOMIC NEWS: This week's schedule includes: new motor vehicle sales (today 11.30 am AEST); the minutes from the last RBA monetary policy meeting (tomorrow); monthly leading index (Wed); quarterly business confidence (Thu); and quarterly import prices (Fri). China releases a leading index on Wednesday and manufacturing figures on Thursday. A relatively light week for scheduled US news is dominated by the dire housing market. Key reports include: home builders index (tonight); housing starts (Tue); existing-home sales (Wed); and weekly jobless claims, leading indicators, Philly Fed (Thu).

Good luck to all.