Morning traders. Thoughts are with Jimmy1979 following his devastating loss yesterday (see last night's "After market" thread).
Market wrap:
Shares are set to gap higher after progress on US debt ceiling negotiations fuelled a sharp turnaround on Wall Street overnight.
The December SPI 200 futures contract jumped 43 points or 0.8% to 5250 as hopes rose that Senate leaders can fashion a deal to avoid a catastrophic default when the federal borrowing authority expires on Thursday.
The S&P 500 turned an opening loss of around 0.7% into a closing gain of 0.4% or seven points and a fourth straight rise. The Dow put on 64 points or 0.42% and the Nasdaq added 0.61%.
Democrat and Republican leaders in the Senate said they were optimistic about concluding a deal to re-open the government and raise the debt ceiling. Democrat Senate Majority Leader Harry Reid was "very optimistic" about a deal "this week". Republican Senate Minority Leader Mitch McConnell said, "We'll get a result that's acceptable to both sides." The market held most of its gains despite the postponement of a scheduled meeting with President Obama this morning to allow negotiations to continue. Read more here.
"Investors are encouraged that the political posturing appears to be dying down and that real negotiations are under way," Alan Gayle, senior strategist at RidgeWorth Capital Management in the US, told Bloomberg. "The expectation is that as long as there are genuine negotiations, that there will be a reasonable solution that will avoid a default and secondly will get the government up and running again."
Energy and tech stocks led the advance during a session without significant economic or corporate earnings news. Bond markets were closed for the Columbus Day public holiday and equity trading volumes were smaller than normal. The third-quarter earnings season heats up tonight with the release of reports from Citigroup, Coca-Cola, Johnson & Johnson, Yahoo and Intel.
The big two Australian miners extended last week's rally as iron ore shrugged off yesterday's disappointing Chinese trade report. BHP put on 0.82% in US trade, Rio Tinto 1.49%. Spot iron ore for import to China yesterday climbed 50 cents to US$133.60 per dry metric tonne.
Gold bounced off a three-month low before surrendering some gains as progress on the Washington impasse dulled haven demand. Gold for December delivery was lately up $4.50 or 0.4% at US$1,272.70 an ounce after exceeding US$1,290 in electronic trading.
Oil edged higher late in a choppy session as hope ebbed and flowed with reports out of Washington. West Texas Intermediate crude for November delivery was recently ahead 19 cents or 0.2% at US$102.20 a barrel.
Copper was boosted by strong demand from China last month. Copper imports to China increased 18% last month despite a 0.3% decline in overall exports of goods. US copper for December delivery was recently up three cents or 0.9% at US$3.30 a pound. In London, copper put on 0.8%, nickel 0.6% and zinc 0.65%. Aluminium and tin fell 0.6%.
A rebound in euro-zone industrial production was not enough to overcome jitters over the US political deadlock. Read more here. Germany's DAX dipped 0.01%, France's CAC edged up 0.07% and Britain's FTSE put on 0.32%.
TRADING THEMES TODAY
GAPPING HIGHER: A bright open awaits after Wall Street continued to pre-empt a breakthrough in the Washington stalemate. Short-sellers wrong-footed by yesterday's action face a scramble. Wall Street has now recovered most of its losses since the spotlight turned to the debt ceiling, which suggests a deal is pretty much considered a sure thing. That was always the likely outcome but there is room for disappointment, given the fractious nature of US politics. The gains were broadly spread in the US, with some rare relief for precious metals miners. Here, the current mania for mobile media stocks should continue to provide opportunities.
ECONOMIC NEWS: The minutes from the last Reserve Bank policy meeting are due at 11.30am EST, along with monthly new motor vehicle sales. Europe's Economic and Financial Affairs Council meets tonight and the monthly economic sentiment report is due. Highlights in the US include the Empire State Manufacturing Index and a speech by Federal Reserve Bank of New York President William Dudley.
