daytrading dec 1 pre-market

Morning traders.

Market wrap:

Co-ordinated central bank action to help banks hamstrung by Europe's debt crisis is set to catapult Australian stocks higher this morning as part of the biggest three-day rally in global equities in two years.

The December SPI 200 futures contract ended the night session 141 points or 3.4% stronger at 4255 as European and US stocks surged, oil broke back through US$100 a barrel and base metals soared.

The Dow jumped 447 points or 3.86% after six central banks announced co-ordinated cuts in US dollar lending rates for banks hit by liquidity problems as a side-effect of Europe's sovereign debt crisis. Separately, China announced a cut in the amount of money its banks have to set aside in reserves, freeing up more cash for lending. The S&P 500 rallied 4.33% and the Nasdaq 3.64%.

The MSCI All-Country World Index extended its three-day rally to 7%, the biggest run since 2009, as Europe's major markets leaped between 3 and 5%. Britain's FTSE put on 3.16%, Germany's DAX 4.98% and France's CAC 4.22% as euro-zone bond yields declined.

Statements were issued simultaneously last night by the US Federal Reserve, European Central Bank, Bank of England, Bank of Japan, Bank of Canada and the Swiss National Bank announcing 50 basis point cuts in US dollar liquidity swap arrangements. The move is intended to pump liquidity into the market after the cost of borrowing in US dollars from the interbank lending market hit a three-year high.

"The big deal with all these central banks working together is the message they are creating, that we've identified the problem and we're working together," the chief executive officer at Hefty Wealth Partners in the US told MarketWatch. "Up until this point that hasn't happened. The big deal is just saying they are going to be involved. It's not like they brought out the tank - they brought out the six-shooter."

Independently, China announced it was reducing the reserve requirement ratio for its banks by 0.5%. The move was interpreted as the first step in an expected loosening of Chinese monetary policy as economic activity slows.

US economic data was overshadowed by the central bank action but continued to surprise to the upside. Jobs, housing and business activity reports all topped economists' expectations.

Commodities and the Australian dollar surged as risk appetite strengthened. The Aussie was lately up nearly three cents at US$1.0284. In US trade, Rio Tinto surged 9.2%, BHP 7.9% and Alumina 11.1%.

Industrial metals enjoyed their strongest session in weeks as China's bank reserve cut encouraged hopes of a revival in metals demand. In London, copper rallied 5.05%, aluminium 5.5%, lead 3.7%, nickel 2.1%, tin 1.6% and zinc 5.6%. US copper was recently up 5.4%.

An analyst at Natixis told Reuters China's overnight action "is a very significant development. It represents the beginnings of a move towards easier money in China where there had been a tightening of monetary conditions since early 2010. We are absolutely not out of the woods yet but if you're looking for the necessary pre-conditions for improvements in base metals prices in the months ahead, this is top of the list."

Oil ran as high as US$101.75 a barrel as investors bet that the central banks' action will free up liquidity and may represent a turning point in Europe's two-year debt crisis. Crude for January delivery was recently up 51 cents or 0.5% at US$100.30 a barrel.

A third night of gains carried gold to a two-week high following a sharp decline in the US dollar. Gold for December delivery was lately up $32.60 or 1.9% at US$1,746 an ounce.

TRADING THEMES TODAY

LEADERSHIP AT LAST: Hallelujah. 64eheh can take the day off - there is enough good news around this morning to lift the gloomiest of spirits. The market has been waiting for someone somewhere to show some leadership and break the negative feedback loop that has sent equities into a tailspin since April. Last night it happened in the shape of united central bank action to prevent interbank lending markets freezing up the way they did in 2008. That in turn should encourage banks to start lending again, which feeds economic growth and points to a way out of this mess, albeit a long way in the future. Equity markets always look six months ahead. It was especially heartening to see US stocks were still rising as the market closed this morning, suggesting there is more to come in this rally, despite substantial gains already. Definite echoes of March 2009.

CHINESE MANUFACTURING: It's hard to see anything derailing a boom session on the ASX today but if anything is going to cause a wobble it's two manufacturing reports due today from the biggest consumer of Australian raw materials. The overnight move by China's central bank to cut bank reserve requirements has heightened concerns of a significant slowdown in the Chinese economy. Today's reports may provide confirmation. The official government manufacturing purchasing managers' index is due at noon AEST. HSBC's Final Manufacturing PMI is due at 1.30 pm.

ECONOMIC NEWS: A busy day for domestic news brings the manufacturing index at 9.30 am AEST, building approvals and retail sales at 11.30 am and year-on-year commodity prices at 4.30 pm. Two separate Chinese manufacturing reports are due at noon and 1.30pm. Tonight's schedule in the US includes weekly jobless claims, manufacturing PMI, manufacturing prices, construction spending, vehicle sales and natural gas storage.

Good luck to all.