daytrading nov 4 pre-market

Morning traders.

Market wrap: A surprise rate cut from the European Central Bank and a Greek back-down over plans for a bailout referendum have Australian shares pointed sharply higher this morning.

The December SPI 200 futures contract ended the night session 88 points or 2.1% stronger at 4271 as US and European stocks surged.

A dramatic night on world markets saw stocks on both sides of the Atlantic reverse early losses as the cloud of gloom over European sovereign debt lifted. The S&P 500 rallied strongly for a second straight night, overcoming weak domestic economic news to put on 1.88%. The Dow added 208 points or 1.76% and the Nasdaq 2.2%.

The European Central Bank launched the turnaround by cutting its major lending rate a quarter of a percentage point to 1.25% following a recent run of disappointing economic data. New ECB President Mario Draghi warned that the euro-zone was in danger of sliding into a "mild recession by year end".

But the big development was Greece's decision to abandon plans to hold a referendum on accepting the latest European bailout. Prime Minister George Papandreou backed down overnight after the main opposition party agreed to support last week's rescue plan. Papandreou faced heavy opposition to a referendum from within his own party after European leaders said they would not deliver much-needed aid to Greece until the country had decided whether it wished to remain in the euro-zone.

"Papandreou absolutely blinked in this game of chicken," the chairman of Holland & Co in the US told Bloomberg. "The interesting thing is that it took him so long to blink. The world's markets told him he was wrong and he still persisted for an extended period of time. It was insane."

The major European markets rallied for a second day as the ECB cut rates and early news reports suggested a change of heart in Greece. Britain's FTSE added 1.12%, Germany's DAX 2.81% and France's CAC 2.73%.

The night's US economic news was mixed. Consumer confidence declined and services industries slowed their rate of expansion, but weekly jobless claims dropped back under 400,000 and quarterly productivity improved for the first time this year.

A dip in the US dollar helped commodity prices rally. Oil charged past US$94 a barrel as risk appetite was boosted by developments in Europe. Crude for December delivery was lately up $1.52 or 1.6% at US$94.03 a barrel.

Gold hit a six-week high as the European rate cut added to the case for alternative stores of wealth. Gold for December delivery was recently up $34750 or 2% at US$1,764.30 an ounce.

Copper reversed initial losses during a mixed session for industrial metals as macro-economic developments continued to overshadow fundamentals. In London, copper added 0.3%, aluminium 1.2%, lead 0.8% and zinc 1.6%. Nickel fell 0.8% and tin 0.3%. US copper was recently up 0.4%.

"The fundamentals should support copper and other metals," a Commerzbank analyst told Reuters. "Inventories have been falling across the board lately, Chinese imports are healthy and cancelled warrants have been rising, but commodity markets at the moment are almost ignoring fundamentals; they are politically driven."

TRADING THEMES TODAY

GAME ON: The ASX is set for a boom open after Greece's referendum back-flip overnight cleared the way for a resumption of the rally that commenced when euro-zone leaders began to get serious about the continent's debt problems. Our market should claw back around half of the week's losses in the opening minutes of trade as the shorts cover. After that? There is plenty of room to keep moving higher but our market's standard routine is to open strong and then fade. Plus, it's Friday and plenty of traders like to close the books before the weekend - especially when conditions are as volatile as present and the G20 is in session.

RESERVE BANK OUTLOOK: The Reserve Bank releases its quarterly Monetary Policy Statement at 11.30 am AEST, which should provide some insight into the reasoning behind this week's cash rate cut and more importantly, offer clues to the central bank's future plans and thinking. In particular, RBA-watchers will be looking for evidence of whether this week's cut is a one-off or the start of a gradual easing of rates that would help support the stock market.

ECONOMIC NEWS: The Reserve Bank's quarterly Monetary Policy Statement is due at 11.30 am AEST (see above). The G20 continues a two-day meeting in Europe tonight. The US schedule tonight includes non-farm employment change, unemployment rate and average hourly earnings.

Good luck to all.