daytrading july 18 pre-market

Morning traders.

Market wrap:

A modestly positive start to trade is likely after V-shaped recoveries in US stocks, oil and key metals as Federal Reserve chairman Ben Bernanke pledged to support the US economy.

The September SPI 200 futures contract ended eight points or 0.2% stronger at 4114 after a volatile night in which solid US earnings and positive economic news were largely overshadowed by Bernanke's semi-annual appearance before Congress.

The Dow slumped more than 80 points in early trade after Bernanke's prepared opening remarks contained no specific action to stimulate the economy. But the blue chips rebounded to a final gain of 78 points or 0.62% after the Fed chairman made it clear in answers to senators' questions that the Fed remains ready to act. The S&P 500 put on 0.74% with all 10 sectors advancing and the Nasdaq added 0.45%.

Bernanke stuck to his recent mantra that the Fed is "prepared to take further action as appropriate to promote a stronger economic recovery". He listed the tools that the Fed has available but unveiled no surprises, warning that reducing unemployment was likely to be "frustratingly slow".

"The stock market has faith in the Fed," the chief investment officer at BMO Harris Private Bank in the US told Bloomberg. "With all of the headlines, and all of the slowing, investors still believe the Fed will do anything in its power to keep the ship afloat."

Also helping sentiment was a mostly positive round of earnings results and economic news. Shares in Goldman Sachs, Mattel and Coca-Cola rallied after beating analysts' expectations. Overnight reports showed industrial production increasing 0.4% last month, sentiment among house-builders reaching its highest level since the GFC and zero inflation last month.

European markets caught the downturn in US equities but closed before the rebound. Germany's DAX put on 0.18% while France's CAC lost 0.09% and Britain's FTSE dropped 0.59%.

Commodities traded inversely to gyrations in the US dollar as investors analysed Bernanke's remarks for signals about the likelihood of more quantitative easing. Oil survived a mid-session plunge to advance to a seven-week high after its fifth straight winning session. West Texas crude for August delivery was recently up 65 cents or 0.7% at US$89.08 a barrel after dipping as low as US$87.41.

Gold fell in early trade as Bernanke gave little hint of further stimulus, but recovered most of its losses as he reiterated the Fed's willingness to act if needed. Gold for August delivery was lately down $9.30 or 0.6% at US$1,582.30 an ounce.

Most industrial metals retreated. In London, copper was unchanged and tin put on 0.75%. Aluminium fell 0.8%, lead 0.3%, nickel 0.95% and zinc 1.9%. US copper for September delivery was recently down two cents or 0.5% at US$3.47 a pound.

TRADING THEMES TODAY

RALLY INTACT: Our market took a pretty big punt on Ben Bernanke yesterday and got away with it. The Fed chairman said just enough of the right things overnight to satisfy Wall Street. Having pre-empted the overnight gains, the ASX doesn't have much of a platform for further advances today but the mood on the market has been so bullish this week that a fourth day of gains is possible with overhead resistance around 30 points away. Banks, biotechs and oilers were among the industry picks in the US. Transport stocks were hurt by a fifth straight rally in oil. Precious metals miners remained in the doldrums.

ECONOMIC NEWS: The Melbourne Institute's leading index of economic indicators is due at 10.30am EST. Fed chairman Bernanke's testimony continues tonight in the US. Also due: building permits, housing starts and crude oil inventories.

Good luck to all.