daytrading dec 19 pre-market

Morning traders.

Market wrap:

Shares are set to extend yesterday's 17-month high after signs of progress on US budget negotiations fuelled a strong night on Wall Street.

The December SPI 200 futures contract rallied 29 points or 0.6% to 4631 this morning as a second night of gains pushed the S&P 500 to a nine-week high.

Solid economic numbers once again took a backseat to political theatre as the US's benchmark index rallied 1.16%. The Dow jumped 116 points or 0.87% and the Nasdaq added 1.47% as Apple shrugged off recent analyst downgrades.

The rally came as the White House and Republican congressional leaders reportedly made concessions that narrowed differences between the two sides over a package of tax increases and spending cuts due to take effect on January 1 unless a compromise is struck. Reports said President Obama will now accept US$400,000 as the starting point for increased taxation, up from US$250,000. Meanwhile Republicans were working on a "Plan B" that held the ceiling for tax increases at US$1m per annum.

"Eventually they will come up with a deal, as I don't think the sides are that far apart," the chief market strategist at JP Morgan Funds in the US told MarketWatch. "Politicians can argue about the minutiae of exactly which spending gets cut and which taxes go up, which is important, but the biggest tax being levied on the American people right now is the uncertainty tax, and President Obama and House Republicans now have the opportunity to lower it considerably."

Confidence among house-builders hit a six-year high this month in another sign that a recovery in the US housing market is gathering pace. The NAHB/WFHM index rallied two points to a seasonally-adjusted 47 from 45 in November but remained below the critical 50-point level despite eight straight months of improvement.

European markets joined the global rally that began yesterday in Asia. Germany's DAX advanced 0.65%, France's CAC 0.3% and Britain's FTSE 0.4%.

Precious metals, a traditional haven in times of trouble, fell victim to the growing mood of optimism in the US. The Philadelphia Gold and Silver Index of US miners fell 1.55% as gold slumped to its lowest level since late August. Gold for February delivery was lately down $25.10 or 1.5% at US$1,673.10 an ounce. Silver for March delivery fell 60 cents or 1.8% to US$31.69 an ounce.

Oil nudged US$88 a barrel for the first time in two weeks. West Texas crude for delivery in January was lately up 78 cents or 0.9% at US$87.99 a barrel after trading as high as US$88.16.

Tin was a stand-out, hitting an eight-and-a-half month high as industrial metals continued to consolidate recent gains.
US copper for March delivery was recently down around two cents or 0.55% at US$3.65 a pound. In London, copper eased 0.5%, aluminium 0.2% and zinc 0.1%. Tin put on 0.7%, lead 0.8% and nickel 1%.

TRADING THEMES TODAY

SANTA RALLY GATHERS PACE: The XJO is set to push further into blue sky for 2012 this morning as the stars appear to be aligning for a period of out-performance. China's 18-month slowdown seems to be at an end, a budget deal in the US looks likely within weeks and Europe's problems appear contained, for now at least. There are plenty of "ifs" and "buts" attached to that assessment, but the general outlook appears more promising than it has for some considerable time. A resumption of strong Chinese growth would bring international money back to our market, but the strong dollar remains a millstone. The gains in the US were broad and included a health 1.47% jump in the Russell 2000 Index of small caps. Participation at the speculative end of our market has improved this week, with XSO volumes particularly strong yesterday. Gold/silver miners bucked the overnight trend in the US and will likely receive similar treatment here today.

ECONOMIC NEWS: The Melbourne Institute's leading index of economic indicators is due at 10.30am EST. Germany releases its Ifo business climate index tonight. The US has building permits, housing starts and crude oil inventories.

Good luck to all.