Daytrading August 19 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:
The share market is primed for a sixth gain from seven sessions after merger news, upbeat housing data and talks between Russia and Ukraine helped push US stocks towards record levels.

The September SPI 200 futures contract rallied 25 points or 0.5% to 5554 as the Nasdaq reached a a 14-year peak and the S&P 500 closed less than 1% off its all-time high.

The S&P 500 put on 17 points or 0.87% as traders breathed a sigh of relief that tensions between Russia and Ukraine eased over the weekend after the foreign ministers of both countries met for five hours. The Dow advanced 176 points or 1.06% and the Nasdaq 43 points or 0.96% to close at a level last seen in March 2000.

“People that were concerned about the possibility of a serious deterioration of the Russia-Ukraine situation and had no idea what was going to happen over the weekend came in this morning with a different perspective,” Marshall Front, chief investment officer at Front Barnett Associates in the US, told Bloomberg. “The market opened up higher and we’ve been creeping up since then with some positive housing sentiment figures.”

Ukraine's Pavlo Klimkin and Russia's Sergei Lavrov met in Berlin after Ukraine claimed on Friday that it had destroyed most of a Russian military convoy that entered Ukrainian sovereign territory. Afterwards, Klimkin said the meeting brought "moderate progress", but Lavrov said they were no closer to a ceasefire. Also encouraging traders was evidence that the tide may have turned in Iraq, where Kurdish and government troops recaptured the country's largest dam from Islamic militants.

House-builders were among the session's strongest stocks after a measure of confidence among builders rallied to its highest level in seven months. The National Association of Home Builders/Wells Fargo index rose two points to 55, indicating the recent downturn in the housing market may have bottomed.

Interest in potential take-over targets was revived by news that discount retail chain Dollar General had offered US$9.7 billion for rival Family Dollar, trumping an earlier offer from Dollar Tree. Shares in all three companies rallied.

Small caps, tech stocks and biotechs were among the stand-out sectors in the US. The Russell 2000 rallied 1.47%, the Nasdaq Computer Index 1.02% and the Nasdaq Biotechnology Index 1.03%.

The foundations for the upbeat mood on Wall Street were laid in Europe, where shares rebounded strongly from Friday's panic falls that followed the first reports that Ukraine had attacked Russian troops. The Stoxx Europe 600 index bounced 1.18% as Germany's DAX gained 1.68%, France's CAC 1.36% and Britain's FTSE 0.78%.

Oil fell back as weekend developments in Iraq and Ukraine sucked some of the risk premium out of the market. West Texas Intermediate crude oil for delivery in September dropped 94 cents or 0.9% to settle at US$96.41 a barrel. The contract was lately trading at US$96.60.

Gold retreated back below US$1,300 ahead of a big week of US Federal Reserve action, including the release tomorrow night of the minutes from the last policy meeting and the Fed's annual two-day symposium at Jackson Hole this weekend, which in the past has been used to announce major policy changes. Gold for December delivery retreated $6.90 or 0.5% to settle at US$1,299.30 an ounce and was recently at US$1,298.30.

Most base metals shrugged off early selling pressure following news yesterday that the prices of new houses in China fell for a third straight month. China's National Bureau of Statistics said house prices declined 64 out of 70 cities last month, the biggest number since January 2011. In London, copper gained 0.5%, aluminium 0.9%, lead 0.1% and zinc 0.4%. Nickel lost 0.8% and tin 0.2%. US copper for September delivery was recently up one cent or 0.3% at US$3.11 a pound.

BHP and Rio Tinto extended their rallies in US trade, rising 0.43% and 0.49%, respectively. Spot iron ore for import to China yesterday eased 10 cents to US$93.30 a dry tonne.

The dollar was this morning buying 93.27 US cents.

TRADING THEMES TODAY

BACK TOWARDS THE HIGHS: As retraces go, the latest was short and shallow, indicating that for all the talk about over-priced equities, there is still plenty of buying interest. Wall Street closed less than 1% below record levels, and the ASX will likely follow suit today, nearing last month's six-year high. The frenzy over the Apache/CVN oil find should generate fresh interest in the spec end of the market, which has been looking weary over the last week or two as the graphite craze unwound some excesses. The minutes from the July Reserve Bank meeting are due at 11.30am EST, but are unlikely to contain any surprises.  

ECONOMIC NEWS: The RBA releases the minutes from the July policy meeting at 11.30am EST. A meaty menu tonight in the US includes building permits, housing starts and the consumer price index/core CPI.

Good luck to all.