daytrading nov 9 pre-market

Morning traders.

Market wrap: Australian shares are set to gap higher this morning after Italian Prime Minister Silvio Berlusconi's resignation helped US stocks reverse early losses.

The December SPI 200 futures contract ended the night session 56 points or 1.3% stronger at 4338 as the big Australian miners recorded solid gains in US trade.

US stocks declined in early trade after Berlusconi lost his parliamentary majority in an overnight budget vote, but the major indexes closed at their intraday highs after Italian President Giorgio Napolitano said Berlusconi would resign next week. The S&P 500 advanced for a second day, rising 1.17%. The Dow put on 102 points or 0.84% and the Nasdaq added 1.2%.

"The change in leadership is a sigh of relief for the market," the chief investment officer at First Citizens Bancshares in the US told Bloomberg. "A regime change might be part of the solution to get new ideas flowing. Long term, we need to look at what's plan B and C that the new leadership will bring so that the market can continue moving higher."

A night of drama in the Italian parliament saw Berlusconi's allies desert him in a routine parliamentary vote, denying the government an outright majority and raising the prospect of a confidence vote. Instead, Berlusconi told the President he will resign after parliament approves his latest austerity plan next week.

These developments came as Italian borrowing costs climbed to a new euro-era high. Overnight, the yield on 10-year bonds increased to 6.77%, dangerously near the 7% level that forced Greece, Ireland and Portugal to seek handouts.

The major European markets pared solid gains after the Italian vote, closing before news of Berlusconi's resignation. Britain's FTSE rallied 1.03%, Germany's DAX 0.55% and France's CAC 1.28%.

Rio Tinto put on 2.7% overnight in US trade, BHP 1.2% and Alumina 1.9% as a broad rally lifted most US sectors. Banks rallied strongly on the expectation that Berlusconi's departure will make it easier for Italy to pull back from the debt precipice.

Precious metals miners in the US gave up a little ground as gold lost some safe-haven appeal. Gold for December delivery hit a seven-week high above US$1,800 an ounce before a modest pullback saw it trade recently at US$1,785.10, down $6 or 0.3%.

Oil rallied for a fifth straight night amid heightened tensions in the Middle East and following an increased demand outlook from OPEC. Recent advances in Iran's nuclear arms program have increased the likelihood of a pre-emptive Israeli attack. Meanwhile, OPEC's World Oil Outlook report revised its forecast of global oil demand up 1.9 million barrels a day to 92.9 million barrels. Crude for December delivery was recently ahead $1.44 or 1.6% at US$96.97 a barrel.

Most industrial metals recorded modest gains as demand remained clouded by events in Europe. In London, copper added 0.1%, aluminium 1.3%, lead 0.8%, tin 1.2% and zinc 1.6%. Nickel eased 0.6%. US copper was recently up 0.5%.

TRADING THEMES TODAY

RELIEF RALLY: The market obviously feels that Berlusconi's pending departure removes another obstacle to European salvation. A sharp rise in risk appetite was highlighted by overnight gains in US banks, oil and Australian miners listed in the US, and falls in the US dollar and gold. That strongly suggests we should see a decent rally here today, assuming the monthly Chinese economic report doesn't contain any nasty surprises (see below). As for tonight, the market will look for declines in Italian bond yields to confirm that bond traders share the stock market's enthusiasm for the latest developments. Otherwise...

CHINESE INFLATION: Lunchtime brings the monthly round-up of Chinese economic data, with the main focus today being the inflation rate. Economists are tipping a sharp easing in the annual rate of consumer inflation from 6.1% in September to 5.4% last month. That would be a positive for Australian materials companies because weaker inflation increases the possibility of monetary easing in China, which in turn may lead to increased demand for Australian resources. The news should hit trading screens at 12.30 pm AEST. Also due: industrial production, retail sales, the producer price index and fixed asset investment.

ECONOMIC NEWS: Consumer sentiment figures are due at 10.30 am AEST, followed by monthly home loans at 11.30 am and China's monthly economic report at 12.30 pm. An unusually light week for scheduled US news continues tonight with wholesale inventories, crude oil inventories and a speech by Federal Reserve chairman Bernanke.

Good luck to all.