daytrades july 20 pre-market

Morning traders.

Market wrap: The best session of the year in the US following progress on debt talks has set up Australian shares for a big gap higher at today's opening bell.

The September SPI futures contract ended the night session 49 points or 1.1% ahead at 4490 as the big miners surged in US trade and oil and industrial metals rallied. Gold broke its record run as traders dropped safe havens for risk assets.

The Dow jumped 202 points or 1.63%, its strongest performance since December 1, with IBM leading the gains after it raised its profit outlook. The S&P 500 also put on 1.63% as President Obama backed a bi-partisan plan to reduce the federal deficit, raising hopes that a deal to raise the US debt ceiling is close. The Nasdaq added 2.21%.

"It's a combination of the good corporate earnings and the market is looking for a relief rally from debt-ceiling and deficit negotiations," the chief investment officer at First Citizens Bancshares in the US told Bloomberg. "Obama's support reduces the risk there's no deal by August 2. It shows both sides are working hard to get a deal."

President Obama hailed a new Senate plan to slash US $3.7 trillion from the federal deficits over 10 years as "a very significant step". The President said talks had made "some progress" but warned there was no time left for "symbolic gestures or posturing" as the August 2 deadline looms.

Earnings reports were mixed, with IBM the stand-out and Coca Cola beating estimates, but Bank of America reported its biggest ever quarterly loss and Goldman Sachs missed targets. Builders were boosted by news that housing starts improved to a five-month high. In US trade, BHP rallied 2.6%, Rio Tinto 1.9% and Alumina 3.5%.

The unexpectedly strong housing data gave oil and copper a leg-up as traders increased their bets on the outlook for the US economy. Crude for August delivery jumped $2.13 or 2.2% to US $98.06 a barrel.

Copper, which has been remarkably resilient throughout the US/European debt concerns, rallied to a three-month high in London. In London, copper added 1.25%, aluminium 2%, lead 1.4%, nickel 1.2%, tin 1.7% and zinc 2.2%. US copper was recently up 1.5%.

"It seems it is very much markets reconsidering that the debt crisis is not something that is going to weigh too much on global growth," a Danske Bank analyst told Reuters. "Base metals are rebounding on this, maybe reconsidering that the situation at least in Asia is not that bad, and indeed in our view we're likely to see Chinese demand for raw materials bounce back quite significantly within the next few months."

Precious metals lost ground as the change in the mood of the market undermined assets seen as "safe havens". Gold for August delivery was recently off $13.60 or 0.85% at US $1,588.80 an ounce. September silver fell $1.28 or 3.2% to US $39.06 an ounce.

A partial rebound in the banks from Monday's heavy losses helped the major European markets rally. Britain's FTSE put on 0.65%, Germany's DAX 1.19% and France's CAC 1.21%.

TRADING THEMES TODAY

BOUNCE: A sniff of a resolution to the US debt ceiling stalemate and away we go. Our futures are not as bullish as we might hope after that big surge in the US, perhaps because we all know how this set-up usually plays out: a big open followed by a steady fade as traders lock in profits. That's the most likely scenario, but now and then the market surprises by opening strong and keeping on going. They're rare but this might be one of those days - especially in light of this morning's Apple result (see below). US sectors were strong across the board, with the exception of precious metals miners - profit-taking likely here today.

APPLE UP, YAHOO! DOWN: Two of the big names delivered earnings after the close of regular trade on Wall Street this morning, to mixed reactions. Shares in Apple, the more significant of the two, were recently up 5.3% in after-market trade after the company topped analysts' expectations. Shares in Yahoo! were off 1.85% following a small decline in net sales. With the market apparently focusing on the better results last night, that Apple news could set us up for another good session tonight.

ECONOMIC NEWS: The monthly leading index of economic indicators is due at 10.30 am AEST. A Chinese leading index is due at noon, but it's one of the less significant Chinese reports. The US will look for further signs of improvement in the housing market with tonight's release of monthly existing-home sales. Also due: weekly crude oil inventories.

Good luck to all.