daytrading dec 6 pre-market

Morning traders.

Market wrap:

Australian stocks are likely to open cautiously higher after European credit worries trimmed a strong rally on Wall Street.

The December SPI 200 futures contract ended the night session 14 points or 1.5% ahead at 4332 as a Financial Times report of a credit threat to Germany and France took some of the wind out of US equities, oil and metals.

The Dow was up more than 180 points midway through the session but closed 78 points or 0.65% ahead after the FT said Standard and Poor's will place the euro-zone on "creditwatch negative". The S&P 500 extended its longest winning run since 2009, rising 1.03% and the Nasdaq added 1.1%.

Standard & Poor's declined to comment on FT claims that the agency will place all of the euro-zone, included triple-A rated Germany, France, the Netherlands, Austria, Finland and Luxembourg on creditwatch negative, which implies a 50% chance of a downgrade within 90 days. The news heightened worries that sovereign debt problems are infecting Europe's strongest economies.

"This is a wake-up call concerning the credit quality of European sovereign and bank credits," a managing director at Southwest Securities in the US told Bloomberg. "I have been saying for quite some time that there were ramifications for the sovereign nations in Europe including the strongest ones. While the American stock market is up, I believe that it will focus on this soon enough."

US and European stocks rallied earlier after Italy's new Prime Minister announced a tough austerity package and German Chancellor Angela Merkel and French President Nicolas Sarkozy called for tighter fiscal union within the euro-zone. Italy's borrowing costs pulled back from the danger zone overnight. Britain's FTSE added 0.28%, Germany's DAX 0.42% and France's CAC 1.15%.

Key commodities sold off alongside US equities following the FT report. Oil hit US$102.44 a barrel as Iranian sabre-rattling increased tensions in the Middle East, before falling back to break-even. Crude for January delivery was recently flat at US$100.96 a barrel.

Gold was hurt by a sharp rally in the US dollar as the threat to Europe's strongest sovereign debt ratings undermined the euro. Gold for February delivery was lately off $26.80 or 1.5% at US$1,724.80 an ounce.

Industrial metals were mixed, with copper rising in London and dipping in US trade. In London, copper added 0.5%, nickel 3.5% and tin less than 0.1%. Zinc fell 1%, aluminium 0.1% and lead 0.6%. US copper was recently down 0.8%.

TRADING THEMES TODAY

BULLS KEEP CHARGING: An interesting night on Wall Street, with equities showing real resilience despite a mid-afternoon wobble. The longest winning streak since 2009 has to end some time but that little buying spree in the final minutes this morning suggests the bulls think there is more to come. The XJO is nearing significant overhead resistance but just might squeeze out an extraordinary seventh straight win today. However, it will be a surprise if there is no profit-taking on world markets before Europe's summit on Friday - the EU has a habit of over-promising and under-delivering.

INTEREST RATES: Will they cut or won't they? The Reserve Bank hands down its cash rate decision at 2.30 pm AEST today. Economists are divided but the futures market says there is a very high probability of a 0.25 point cut this afternoon to 4.25%. The rate and accompanying statement will be posted here at 2.30pm sharp: http://www.rba.gov.au/

ECONOMIC NEWS: The latest current account data are due at 11.30 am AEST, followed by the Reserve Bank's cash rate announcement at 2.30 pm (see above). A relatively light overseas schedule tonight includes German factory orders, revised European GDP and US economic optimism.

Good luck to all.