daytrading july 4 pre-market

Morning traders.

Market wrap:

A fifth day of stock market gains in six is within reach after a surprise jump in factory orders helped push US equities to a two-month high in holiday-shortened overnight trade.

The September SPI 200 futures contract ended the night session 28 points or 0.7% ahead at 4126 as overseas resource stocks were boosted by multi-week highs in oil and metals.

Gains in the commodity sector, industrials and tech stocks steered the S&P 500 0.62% higher before Wall Street shut down at 1pm New York time for tonight's Independence Day public holiday. The Dow put on 72 points or 0.56% and the Nasdaq added 0.84%.

Worries over the contraction in US manufacturing reported on Monday were soothed by an unexpectedly strong increase in factory orders. Orders for factory goods improved 0.7% in May. Economists had been expecting a rise of 0.1%.

"The factory orders report was a good surprise," the chief investment officer of Philadelphia Trust told Bloomberg. "Investors are also finding comfort in central bank action. The Fed has anticipated that they will do whatever it takes to not let the economy slip, China is doing the same and the Europeans seem to be doing that too."

European markets rallied amid speculation that the European Central Bank and Bank of England will tomorrow night unveil fresh stimulus measures. Elsewhere, a state-owned newspaper in China flagged further easing in bank reserve requirements and expectations are rising in the US that any weakness in this week's jobs data will encourage the Federal Reserve to stimulate the economy. Germany's DAX advanced 1.26%, France's CAC 0.96% and Britain's FTSE 0.83%.

"Markets are factoring in a 25-basis-point rate cut from the European Central Bank, an increase in the Bank of England's bond-buying program and improved chances that the Fed will introduce QE3," a strategist at GFT in the UK told MarketWatch.

Oil and metals extended rebounds from multi-month lows that commenced last week. West Texas crude rallied to a five-week high as sabre-rattling from Iran raised geopolitical tensions. Iran held missile drills and renewed threats to close the Strait of Hormuz as Western sanctions against Iranian oil exports came into effect. Crude for August delivery was recently up $3.89 or 4.7% at US$87.64 a barrel.

Industrial metals were boosted by yesterday's upbeat Chinese services sector report and by short-covering as stimulus expectations increased. In London, copper added 2.5% to a seven-week high, aluminium 3.8%, lead 3.2%, nickel 3.2%, tin 1.85% and zinc 1.8%. US copper for July delivery was recently up seven cents or 1.9% at US$3.54 a pound.

Gold, a natural beneficiary of inflationary measures by central banks, reached a two-week high. August gold was lately up $19.90 or 1.25% at US$1,617.60 an ounce.

TRADING THEMES TODAY

RECOVERY CONTINUES: A very promising set of overnight leads should provide a platform for a new six-week high on the ASX today, despite the usual risk-aversion heading into a US public holiday. Resource stocks should lead the way after a five-week high in oil overnight, seven-week high in copper and two-week high in gold. Markets are now factoring in further stimulus from central banks around the world, starting tomorrow night in Europe. China is likely to follow suit perhaps as early as this weekend after a state-owned journal called for another cut to bank reserve requirements.

COMMODITIES REBOUND: The recent collapse in commodity prices appears to have well and truly bottomed out after the recovery that started last week gathered pace overnight. Oil and metals are now well off their lows, but many share prices in Australia, especially among the juniors, are significantly lagging. Confidence is slow to return after a slump on the scale witnessed in recent months but traders with a medium-term perspective could do worse than sift through our battered resource sector for recovery stories.

ECONOMIC NEWS: The services sector index is out at 9.30am EST, followed by retail sales at 11.30am. Europe has the same menu, plus final GDP figures. Trading in the US is suspended tonight for the July 4 holiday.

Good luck to all.