daytrades may 13 pre-market

Morning traders.

Market wrap: Australian stocks are set to open higher this morning after European austerity plans soothed market nerves and Wall Street rallied on further evidence of an improving U.S. economy.

With 5 minutes left to trade, the local June SPI futures contract was up 61 points at 4644.

Hopes that the European debt crisis has been cauterised were boosted overnight by a successful auction of Portuguese bonds and announcements of budget cuts in
Spain and the UK. European markets rallied and that strength flowed on to Wall Street, where positive earnings results and improving manufacturing data helped investor sentiment.

The S&P 500 rallied 1.37%, the Dow 149 points or 1.38% and the Nasdaq 2.09% after the CEO of IBM said the tech giant will double earnings by 2015.

The UK's FTSE index rose 0.9% new Prime Minister David Cameron announced plans for an emergency budget containing US$9 billion of spending cuts to narrow the budget deficit. Spain's IBEX index climbed 0.8% and the cost of insuring against default on Spain's largest banks fell to the lowest level in three weeks after the Prime Minister announced measures to cut the country's deficit. Spain will reduce public-sector wages by 5% this year and freeze them next year.

"David Cameron's budget-deficit plan reminds people that you have some adults in the world when it comes to addressing the problems," the chairman of a U.S. investment group told Bloomberg. "The European package was another adult response. The global economic recovery is continuing and will likely not be derailed by the European crisis."

A strong U.S. trade report provided further evidence of global recovery. U.S. exports and imports hit their highest levels since October 2008.

"This report speaks to the recovery in the both the U.S. and overseas as both exports and imports continue to advance at a fairly robust pace," wrote economists John Ryding and Conrad DeQuadros, quoted on MarketWatch.

Wall Street shrugged off a strengthening dollar as the euro traded near a 14-month low. The dollar index, which tracks the greenback against six major currencies, was recently up 0.5%.

Gold surged to a new high on concerns about inflationary pressures in Europe but pared gains late in the session. The spot price was recently up $6.90 from Tuesday's New York close at $1,238.30 an ounce.

Oil see-sawed lower as commodity traders rotated into precious metals and the weekly U.S. oil inventory report showed another increase. Crude futures were recently down 90 cents or 1.2% at $75.47 a barrel.

Industrial metals were pressured by the rising U.S. dollar, which makes dollar-denominated commodities more expensive for overseas buyers. In late trade in London, copper was down 0.3%, lead 0.6%, nickel 0.1% and tin 0.6%. Aluminium was up 0.7% and zinc up 1.2%.

TRADING THEMES TODAY

BOUNCE: Further evidence of action in Europe gave the market confidence that the debt crisis might be easing. At the very least that should offer local investors with overnight holds from yesterday a chance to exit with a healthy profit at today's open. After that the standard pattern lately has been a fade for the rest of the session, making for tricky trading. Precious metals should remain strong after another overnight high. Any surprise in this morning's unemployment data - positive or negative - may provide a change in sentiment at 11.30 am.

ECONOMIC NEWS: RBA Assistant Governor Phil Lowe is due to address an investment forum at 11.00 am. Monthly unemployment figures are due at 11.30 am. (Economists expect no change in the current rate of 5.3%.) In the U.S. tonight, Fed Chairman Ben Bernanke is due to speak but the main interest is in unemployment claims. Also due: monthly import prices and natural gas storage.

Good luck to all.