daytrading april 23 pre-market

Morning traders.

Market wrap:

The share market will shoot for a third day of gains after Wall Street shook off soft housing data as resource stocks benefitted from recoveries in gold and oil.

The June SPI 200 futures contract extended yesterday's advance, rising 13 points or 0.3% to 4972 despite further weakness on the London Metal Exchange.

The S&P 500 advanced eight points or 0.5% led by energy and materials stocks after market heavyweights Caterpillar and Halliburton delivered well-received first-quarter earnings. The Nasdaq put on 0.87% as traders anticipated a big week of tech earnings. The Dow put on 19 points or 0.13%.

Dow component Caterpillar rallied 2.83% after the heavy-equipment maker predicted increased demand from China this quarter. Oil services company Halliburton jumped 5.59% as earnings topped analysts' expectations. BHP and Rio Tinto traded mixed amid speculation about the outlook for iron ore. BHP inched up 0.37% while Rio dropped 0.29%.

The market overcame a weak start after a report showed sales of existing homes fell 0.6% last month. The longer-term trend remained positive, but the reading was another in a recent string of deteriorating economic numbers. A separate report showed national economic activity dipped below trend last month.

Volatility continued to decline from last week's two-month high, but remained at elevated levels. The Chicago Board Options Exchange Volatility Index or VIX eased 3.87%, paring last week's 46% four-day surge.

"Volatility is getting more sticky," the head of derivatives research at Weeden & Co in the US told Bloomberg. "It rushes up without going straight back down, which we haven't seen before this year. The markets are starting to process that the economic news has been getting softer and that we're due for a correction. We obviously also had the extraordinary move in gold which has been enhancing volatility across asset classes."

Gold rallied for a third night as a sharp decline in the number of short-sellers in the market signalled rising expectations for a rebound. Gold for June delivery was recently up $30.40 or 2.2% at US$1,425.90 an ounce.

"Physical buying has really taken a lot of people by surprise, and many companies are struggling to keep up demand," the head of research at The Real Asset Co in the US told MarketWatch. "This suggests that we are now seeing a bottom in the gold market as bargain hunters rush in."

Oil also locked in a third advance as it continued to recover from a three-week losing stretch. West Texas intermediate crude oil for May delivery rose 80 cents or 0.9% to US$88.81 a barrel.

Base metals continued to trail the rebound in gold and oil.
Nickel neared a four-year low and copper wallowed near a one-and-a-half year trough. US copper for May delivery was recently off two cents or 0.6% at US$3.13 a pound. In London, copper lost 1.1%, lead 0.5%, tin 0.6% and zinc 0.3%. Nickel bounced to a gain of 0.7% and aluminium added 0.3%.

A directionless night in Europe saw most markets close little changed. Germany's DAX put on 0.24%, France's CAC was flat and Britain's FTSE dipped 0.09%.

TRADING THEMES TODAY

CHINA TO SET TONE: A broadly positive night on overseas markets has given the ASX a platform for modest early gains, but the strength of the close will likely be determined by the preliminary April manufacturing report from China due at 11.45am EST. Economists have lowered their expectations in the light of the recent deterioration in Chinese economic data. Today's HSBC "flash" purchasing managers' index is expected to show a mild softening to 51.4 from 51.6 in March, leaving potential for surprises in either direction. Elsewhere, gold miners and energy stocks should continue to recover today, although it's worth noting that an index of US precious metals miners managed a rally of just 1% overnight and has clawed back less than a quarter of its losses during gold's freefall. Copper remains a worry. The "metal with the degree in economics" has shown little enthusiasm for recovery.

ECONOMIC NEWS: The Conference Board's leading index of economic indicators is due at 10am EST. HSBC releases its preliminary April Chinese manufacturing report at 11.45am. Europe releases manufacturing and services data tonight. New home sales are tonight's main interest in the US. Also due: flash manufacturing PMI, house price index and Richmond manufacturing index.

Good luck to all.