daytrading june 7 pre-market

Morning traders.

Market wrap:

Wall Street's best session of the year has Australian stocks pointed sharply higher this morning following reports of plans to recapitalise Spain's troubled banks.

The June SPI 200 futures contract ended the night session 59 points or 1.45% ahead at 4121 as traders snapped up risk assets including oil, metals and the Australian dollar.

US stocks bolted from the opening bell and kept rising following signals that central banks are ready to act if the global economy continues to deteriorate. The Dow charged 287 points or 2.37% as all 30 component companies advanced. The S&P 500 put on 2.3% for its biggest one-day advance since December. The Nasdaq added 2.4%.

"People are viewing central banks as very aware of the weakness of the global economy and looking for ways to deal with that," the chairman of Holland & Co in the US told Bloomberg. "We've had a major sell-off, valuations are low and that helps to lift the market on a day like today."

European officials are working on a plan to recapitalise Spain's banks by allowing them to borrow from the euro-zone's permanent bailout fund, Reuters reported. Read more here.

The European Central Bank left its benchmark interest rate on hold overnight but President Mario Draghi said some members had pushed for a cut and the bank stood ready to act if the debt crisis worsens. In the US, the Federal Reserve's Beige Book said the economy continued to grow at a moderate pace, but traders were more interested in comments from Fed member Dennis Lockhart who told reporters that risks to the economy were growing and the Fed may extend its Operation Twist stimulus program at its next meeting on June 20.

"It appears the market is under the belief that Uncle Ben [Bernanke] and his band of merry makers are going to be coming to the rescue, on the June 20th," the chief market strategist at Banyan Partners told MarketWatch.

European markets quickly shook off any disappointment over the ECB rate decision. Germany's DAX put on 2.09%, France's CAC 2.42% and Britain's FTSE 2.36%.

The US dollar slumped as traders rotated into risk assets. The Australian dollar continued yesterday's GDP-fuelled rally, adding around a cent overnight to reach 99.26 US cents.

Oil benefitted from the sliding greenback but gains were capped by a disappointing US weekly inventory report. Crude for July delivery was lately up $1.24 or 1.5% at US$85.52 a barrel.

Copper rallied in the US and London after the official China Securities Journal demanded central government increase efforts to stimulate the economy. US copper for July delivery was recently up nine cents or 2.6% at US$3.38 a pound.

Gold hit its highest level in a month, supported by a weaker US dollar and the prospect of central bank intervention. Gold for August delivery was recently ahead $3.70 or 0.2% at US$1,620.60 an ounce.

TRADING THEMES TODAY

GAP UP: I mentioned yesterday afternoon that global markets looked ready to rally, but I can't pretend I backed that call with any overnight holds, dammit. The size of the rally shouldn't come as a huge surprise - bear-market rallies tend to be substantial as short-sellers scramble to cover while bargain-hunters chase prices. There doesn't appear to be much substance behind this counter-trend rally yet, but let's enjoy it while it lasts. The ECB got away with not cutting rates, yet up the market went. I guess it was time to burn the shorts. Our market has the nasty habit of gapping higher on days such as these and then fading, so any early buying should be selective and considered. Easier said than done. The monthly employment report is due at 11.30am EST and may change the market's tone for the better or worse.

ECONOMIC NEWS: The monthly construction index is due at 9.30am EST, followed by unemployment data at 11.30am. Spain and France hold 10-year bond auctions tonight and the UK has a rate decision. Highlights in the US include weekly jobless claims, testimony from Fed chairman Ben Bernanke on the economic outlook and policy before the Joint Economic Committee in Washington, natural gas storage and consumer credit.

Footnote: my usual source of London Metal Exchange closing prices/percentage moves has changed its business model and no longer offers free information. Anyone have an alternative source please?

Good luck to all.