Daytrading Oct 8 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

Strong gains for resource majors point to a positive start to ASX trade after Wall Street ended a choppy session with a solid advance.

The December SPI200 futures contract rose 30 points or 0.6% to 5222 as BHP and Rio Tinto rallied to their highest level in at least five weeks in US trade following an upgrade from Morgan Stanley. More below.

A volatile session saw the major US indices bolt at the open, shed their gains by lunch, then grind out a positive close. The S&P 500 rose 16 points or 0.8% as the health care sector rebounded. The Dow gained 122 points or 0.73% after being up as much as 173 points. The Nasdaq added 43 points or 0.9% as biotechs rallied.

"If you look at the positive influence on the market this week and last week, it's been commodities," Art Hogan, chief market strategist at Wunderlich Securities in the US, told CNBC. "That lift is helping the market in general."

The materials and energy sectors both gained at least 0.9% to extend their rallies into a seventh day. BHP jumped 4.09% to a five-week high in US trade and Rio Tinto 7.82% to its strongest point in at least seven weeks after Morgan Stanley upgraded both to "overweight" from "equal-weight". The analyst report predicted commodity prices would improve 19% from current levels by 2017 and said miner valuations were attractive by historical standards. Read more here and here.

“The commodity rally extending itself is a significant story,” Andrew Burkly, head of institutional portfolio strategy at Oppenheimer & Co in the US, told Bloomberg. “China comes back on the line tomorrow [NB: today Australian time], and with China closed the last six or eight days, we’ve seen our market do better and commodities do better.”

Energy stocks rose despite a downswing in crude oil after a report showed a substantial build-up in US inventories last week. The energy ETF gained 1.25%. West Texas Intermediate crude oil for November delivery settled 72 cents or 1.5% lower at US$47.81 a barrel after the Energy Information Administration announced that inventories jumped 3.1 million barrels last week, roughly 50% more than analysts polled by Reuters expected.

WTI broke out of its trading range to a three-month high on Tuesday, however, the EIA report "will take some of the wind out of the market's sails," Gene McGillian, senior analyst at Tradition Energy in the US, told CNBC. "The report is bearish enough to break the back of the rally, he said. It's cold water on the market."

The iShares Nasdaq Biotechnology Index lifted 1.95%, reversing after two days of falls had pushed the index back towards last week's 10-month closing low. The Russell 2000 index of small caps also outperformed the broader market with a rise of 1.38%.

The NYSE Arca Gold Bugs index edged up 0.33% as gold eked out a fourth straight win. Gold for December delivery settled $2.30 or 0.2% ahead at US$1,148.70 an ounce to extend its gains for the week to 5%.

Base metals rallied ahead of the return of Chinese buyers today from a week-long public holiday. US copper for December delivery was recently up 0.6% at US$2.37 a pound. In London, aluminium improved 1.5%, lead 2.8%, nickel 2.1%, tin 1.8% and zinc 2.3%. Copper hit a two-week high before closing less than 0.1% higher.

Europe's benchmark index extended its winning run to a fourth session, the longest run since August, but gave back most of its gains as US stocks swooned mid-session. The Stoxx Europe 600 added 0.14%, Germany's DAX 0.68%, France's CAC 0.14% and Britain's FTSE 0.16%.

Spot iron ore for import to China yesterday bounced 40 cents to US$54.40 a dry ton.

The dollar was this morning buying 72.12 US cents.

TRADING THEMES TODAY

ATTACKING RESISTANCE: The ASX 200 has the sort of positive leads it needs for a serious assault on overhead resistance around the 5200/5220 level. Morgan Stanley lit a fire under BHP and Rio Tinto overnight and that alone should give good momentum here today. Whether the rally is sustainable will likely depend on the mood in Shanghai as China re-opens for trade after a week on the sidelines. Any strength there would add fuel to the fire here. There is a general theme in the US of beaten-up sectors bottoming out and rebounding - energy, materials, health care. Back home, the dollar is back above 72 US cents.

ECONOMIC NEWS: No significant domestic news scheduled today. Tonight's US highlights are the minutes from the September Federal Reserve policy meeting and weekly unemployment claims.

Good luck to all.