Morning traders.Market wrap: Futures traders expect local stocks...

Morning traders.

Market wrap: Futures traders expect local stocks to erase three days of losses at this morning's opening bell after Wall Street surged more than 2% overnight.

The June SPI futures contract closed 81 points higher at 4468 despite a mixed night for resource prices. Oil rallied but several metals slumped to multi-month lows.

Wall Street rebounded from yesterday's three-month lows as investors cheered healthy domestic economic news, including improving housing and car sales. The S&P 500 charged 2.58% higher, the Dow added 226 points or 2.25% and the Nasdaq 2.64%.

"We're in an oversold market, plus we have economic data such as U.S. home sales coming out ahead of expectations," the chief investment officer at a U.S. investment firm told Bloomberg. "The fundamentals are improving, notwithstanding the problems in the banking system in Europe."

Pending sales of existing homes in the U.S. hit their highest level since October as buyers raced to sign contracts before a tax credit expires. The big three car-makers all reported double-digit rises in U.S. sales last month, compared to the same month a year ago. Bank of America reported that loan demand has stabilised, suggesting the economy has reached a turning point.

The rising tide lifted nearly all sectors, with beaten-up energy stocks notably strong after yesterday's BP-oil-leak inspired sell-off. Oilers rallied 3.4%, airlines 6%, biotechs 3.5%, banks 3.2%, industrials 2.6% and precious metals miners 2.3% despite a flat night for gold and silver.

Gold snapped its six-day winning streak as investors' appetite for risk improved, but early losses were trimmed as the session advanced. The spot price was recently just $1.70 lower than Tuesday's New York close at $1,223.40 an ounce. Silver was also lower but recovering.

Oil was boosted by the strong U.S. economic data. Crude futures were recently up $1.06 or 1.5% at $73.64 a barrel.

Industrial metals slid for a third straight session as fears over a Chinese slowdown overshadowed U.S. news. Zinc fell to its lowest level since late 2009, nickel hit a four-month low and lead its lowest in 10 months, but all pared losses before the close in London.

RBS warned that there were previously unreported stockpiles of base metals in China. "Even assuming that strong underlying Chinese demand growth is sustained, it will still take some time to erode the mountain of unreported Chinese base metal stocks," RBS said in a research report quoted on Reuters. "We believe that a period of lower Chinese base metal imports (copper and nickel) or potential net exports (zinc and aluminum) will be a headwind for base metals in H210."

In London, copper was off 1%, aluminium 0.3%, lead 3.1%, nickel 2.9%, tin 0.7% and zinc 2.6%.

European markets closed flat as advances in the U.S. dragged the major stock indexes back from early losses. Britain's FTSE ended 0.23% lower, France's CAC 0.05% down and Germany's DAX dead flat.

TRADING THEMES TODAY

BOUNCE THEN FADE: This volatile market could give a trader whiplash. The overnight swings in both directions are astonishing. Wouldn't it be great to trade in the U.S. to enjoy the rides? Instead we get big gap opens, then nearly always a fade against the opening trend. This morning is likely to follow that pattern: big opening prices, a brief flurry as the shorts cover, then a decline as a lack of buying conviction is reflected in weak volumes. I hope I'm wrong. Having been near the front of the falls over the last two months, our market is showing early signs of recovery but I'd like to see more measured advances before I'll be convinced that this correction is over.

INDUSTRIAL METALS: One black spot in last night's big rebound overseas was the marked weakness among base metals. Support levels broke under lead, nickel and zinc. All recovered to some extent by the close but the technicals are not pretty, suggesting further weakness is likely. Copper and aluminium are also under pressure. However, London trade finished before the strength of the rebound on Wall Street was evident, so there's the possibility of a gap-up recovery tonight if risk appetite is maintained.

ECONOMIC NEWS: The monthly Performance of Services Index is due at 9.30 am, but the main local interest lies in the trade balance, released at 11.30 am. A very cluttered night lies ahead in the U.S., including unemployment claims, non-farm employment changes, quarterly non-farm productivity, quarterly revised unit labour costs, the services PMI, monthly factory orders, crude oil inventories, natural gas storage and a speech by Federal Reserve Chairman Ben Bernanke.

Good luck to all.