daytrading dec 21 pre-market

Morning traders.

Market wrap:

Shares will shoot for a new 18-month high this morning following steady overnight gains on Wall Street as markets continued to dance to the latest US budget news-bite.

The March SPI 200 futures contract, now the most active, ended the night session 16 points or more than 0.3% ahead at 4625 as traders anticipated a positive start to the last full session until after Christmas.

A late kick saw US stocks close at their highs after Republican House of Representatives Speaker John Boehner pledged to work with President Barack Obama on a budget compromise even as the House prepared to vote on a Republican plan that the White House has vowed to veto. The S&P 500 recouped some of Wednesday's sharp sell-off, rising 0.57% with financials leading the way. The Dow rallied 60 points or 0.45% and the Nasdaq put on 0.19%.

Traders adopted a "glass half full" interpretation of Boehner's latest press conference, where he lambasted the President for being "unwilling to stand up to his own party" but said he would continue to work with him on a compromise over a US$607 billion package of tax hikes and spending cuts due to come into force on January 1. The House of Representatives was due to vote later this morning on the Republican "Plan B", which is likely to pass but has no chance of getting sign-off from the White House.

"Maybe the conciliatory aspect is what the market is biting on, perhaps there is more openness to this being a negotiating tool rather than a final step," the chief investment strategist at Janney Montgomery Scott in the US told MarketWatch.

The night's US economic news was broadly positive but again largely ignored. Third-quarter GDP was revised substantially upwards to 3.1% from an initial estimate of 2%. Manufacturing activity in the Philadelphia region increased to an eight-month high. House sales last month hit their fastest pace in three years. First-time jobless claims jumped 17,000 to 361,000 last week but the four-week average fell to a two-month low.

European markets closed while Wall Street was still struggling for direction, finishing the session off their lows but little changed. Germany's DAX edged up 0.05%, France's CAC added 0.07% and Britain's FTSE lost 0.06%.

A soft night for the US dollar did little to support oil and metals, with silver falling for a sixth straight session and copper nearing a one-month low. Silver for March delivery sagged $1.11 or 3.55% to US$30.01 an ounce, a level last seen in August. Gold for February delivery dropped $18 or 1.1% to US$1,649.70 an ounce and appears on track for a weekly loss of at least 3%. Analysts said last night's strong GDP reading may have been seen by some traders as a signal that the Fed's inflationary stimulus program may end sooner than many anticipate, reducing the appeal of precious metals as alternative stores of wealth.

Risk aversion appeared to grip the London Metal Exchange ahead of the Christmas break and this morning's budget vote in the US. Copper slumped 2.05%, aluminium 1%, lead 0.6%, nickel 1.3%, tin 1.3% and zinc 0.9%. US copper for March delivery was recently down seven cents or 1.8% at US$3.54 a pound.

Oil swung in a trading range of roughly US$1.30 but was lately little changed. West Texas crude for February delivery was lately down 10 cents or 0.1% at US$89.88 a barrel.

TRADING THEMES TODAY

SANTA RALLY CONTINUES:A late nudge turned a tepid session on Wall Street into something a bit better, clearing the way for a fourth day of gains here. Financials led the way in the US and will likely have to do the heavy lifting here after little change in iron ore yesterday and overnight falls in metals. Yesterday's ASX action raised a few concerns, in that it was led mainly by defensives, with the financials joining in later and small caps and resource stocks left behind. The end result was another positive close, but the underlying dynamics were different and may herald a moderation in risk appetite. The most likely explanation is that institutional traders were rotating funds into less volatile assets before they leave for the holidays. Makes sense when BHP had rallied for 11 straight sessions until yesterday. Of more interest to active traders was the improvement this week in speculative activity (see below).

SPEC INTEREST RISING: The speculative end of the market has been disappointingly subdued for much of the five-week rally in the broader market that began in mid-November. That began to change this week and accelerated yesterday with the 131% rally in RXL. The spec bulls are loose now, and we should see some lucrative runs over Christmas, a time of year that traditionally sees more interest in the juniors as institutional activity declines at the big end of the market.

ECONOMIC NEWS: No significant domestic news scheduled today. Durable goods/core durable goods are the main event tonight in the US. Also due: personal spending and income, revised consumer sentiment and inflation expectations and the core PCE price index.

Good luck to all.