daytrading jan 17 pre-market

Morning traders.

Market wrap:

Australian stocks have positive leads after a fall in French borrowing costs helped push European equities higher overnight while Wall Street was closed for a public holiday.

The March SPI 200 futures contract closed nine points or 0.2% stronger at 4137 at midnight but is likely to start the session further ahead after European markets added to gains, US futures turned positive and oil and most metals rallied.

European markets shrugged off a credit downgrade for the euro-zone rescue fund, focussing instead on a successful French bond auction. France sold 1.9 billion euros of one-year notes overnight at a lower yield than last week despite the loss of its S&P AAA credit rating on Friday.

"The bill auctions have been carried out without a problem, which is helpful for market sentiment toward the euro area," a fixed-income strategist at Credit Agricole in London told Bloomberg. "The reaction to the S&P downgrade has been somewhat muted. The move wasn't a surprise and was well-flagged for a number of the issuers."

German and French share indexes rallied despite news that Standard & Poor's has downgraded the European Financial Stability Facility, cutting its credit rating from triple-A to double-A-plus. Germany's DAX put on 1.25%, France's CAC 0.89% and Britain's FTSE 0.37%. Dow futures, which were deep in the red yesterday, were recently up 20 points or nearly 0.2%.

A modest recovery in the euro helped US dollar-denominated commodities recoup some of Friday's losses. Oil benefitted from union action in Nigeria and a warning from Iran that its neighbours should not step up production if Europe places an embargo on Iranian oil. Crude for February delivery was recently up 86 cents or 0.9% in electronic trade to US$99.56 a barrel.

Copper rallied ahead of today's Chinese growth figures, supported by declines in London Metals Exchanged inventories. In London, copper improved 0.65%, aluminium 0.9% and lead 1%. Nickel eased 1.4%, tin 1.2% and zinc 0.3%. US trade was suspended for the Martin Luther King Junior public holiday.

"In the commodity sector the S&P downgrades were already priced in," a Credit Suisse analyst told Reuters. "It wasn't a big surprise. Copper is above US$8,000 again and that's a very positive sign. Inventories are down and that's an indication that demand is robust and has even strengthened a bit. Also, cancelled warrants are up so we expect more inventories drawdowns."

Gold rallied alongside oil and copper in electronic trade. Gold futures for February delivery were lately up $12.70 or 0.8% at US$1,643.50 an ounce.

TRADING THEMES TODAY

WAITING FOR CHINA: The XJO should start the day brightly after European markets confirmed overnight that Friday's credit rating downgrades were already priced in. After that, we may see some caution creep in as traders take profits ahead of the 1pm AEST release of China's quarterly GDP data, plus industrial production, retail sales and fixed asset investments. Analysts are predicting a moderation in the rate of growth from 9.1% to 8.7% last quarter, giving the central bank room for further monetary easing. That's the Goldilocks figure - not too hot, not too cold. A bigger fall would raise concerns that China is heading for a hard landing; a smaller fall may rule out the prospect of further rate cuts or easing of bank lending restrictions.

ECONOMIC NEWS: Today's big intraday news is China's GDP data (see above). Tonight brings German economic sentiment figures, the US reaction to Friday's credit downgrades, more Q4 profit reports and the Empire State Manufacturing Index.

Good luck to all.