Daytrading October 16 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

Shares look set to end the week on a strong note following a surge on Wall Street as weak economic data convinced traders that interest rates will remain at record lows this year.

The December SPI200 futures contract rose 40 points or 0.8% to 5247, positioning the share market for a second day of gains after yesterday's mid-session reversal.

The S&P 500 rose in a straight line after lunch to a final gain of 30 points or 1.49% and an eight-week high as well-received earnings from the big banks and a weak inflation reading boosted risk appetite. The Dow put on 217 points or 1.28% and the Nasdaq 87 points or 1.82%. The gains were the S&P 500's first in three sessions and the strongest in 10 days.

"Today’s rally is the result of generally better than expected results, especially in the financial sector [and] the belief that interest rates will now not increase until late winter or early spring 2016,” Kent Engelke, chief economic strategist at Capitol Securities Management in the US, told MarketWatch.

Traders found the positives in a mixed batch of economic data and quarterly earnings updates. Arguably the most significant piece of data last night was the consumer price index, which eased 0.2% last month, in line with expectations, as energy prices declined. The fall was the index's second in a row, confirming that inflation - identified by the Federal Reserve as a major determinant of a rate rise - remains weak.

"Low inflation continues to say the Fed's not in a rush to raise interest rates and investors are taking that as a positive sign," Kate Warne, investment strategist at Edward Jones in the US, told CNBC. "We keep seeing very low inflation numbers. That's certainly good news for consumers, workers whose wages aren't rising very quickly. But with oil prices flattening, we're not going to see inflation as low as it has been. It will move closer to the Fed's 2 percent number more quickly than people are anticipating and that's a reason the Fed will say there's a reason to raise in 2016."

Indexes from the greater New York and Philadelphia districts both indicated manufacturing has slowed significantly over the last few months. The Empire State index, covering the New York area, was negative last month for the third month in a row for the first time since the GFC. The Philly Fed index declined for a second month. The New York gauge has gone from a high of +27.4 last September to -11.4 this month and the Philadelphia index from +40.2 last November to -4.5.

Bucking the flow of gloomy data, fewer people applied for unemployment benefits last week than any time since 1973. First-time claims fell by 7,000 to 255,000. Read more here.

The financial sector led the rally following well-received updates quarterly updates from Citigroup and Goldman Sachs. Both companies rallied at least 3%, driving the sector up 2.3%. The rally overshadowed negative reactions to earnings from Netflix and Dow component UnitedHealth.

A rebound in the US dollar kept the raw materials sector in check. BHP slipped 0.05% and Rio Tinto 0.08% in US trade. Spot iron ore for import to China yesterday dropped $1.10 to US$53.20 a dry ton.

An index of US gold stocks eased despite a fifth straight advance in the precious metal and a new four-month high. The NYSE Arca Gold Bugs index dipped 0.46%. Gold for December delivery settled $7.70 or 0.7% ahead at US$1,187.50 an ounce, the highest settlement for the most active contract since June 19.

The US energy ETF rebounded 1.8% despite a fourth straight retreat in crude oil following news that US inventories rose more than expected last week. West Texas Intermediate crude oil for November delivery fell 26 cents or 0.56% to US$46.38 a barrel.

Copper led a tentative rise in most base metals. US copper for December delivery was recently up 0.6% at US$2.43 a pound. London copper gained 0.2%, lead 0.1%, nickel 0.7% and zinc 0.6%. Aluminium slipped 1.2% and tin 0.3%.

European stocks rallied for the first time in four sessions as traders increased bets that US rates will stay on hold into the new year. The Stoxx Europe 600 added 1.46%, Germany's DAX 1.5%, France's CAC 1.44% and Britain's FTSE 1.1%.

The dollar was this morning buying 73.33 US cents.

TRADING THEMES TODAY

BULLS IN CONTROL: Someone on Wall Street flicked the switch to 'Buy' at midday New York time and the market took off like a rocket. The result was the strongest close in almost two months and a strong hint that this recovery will continue. Our futures this morning are capped by a flat session overseas for the mining majors, which suggests other sectors will have to do the heavy lifting after two weeks of resources leading the rally. US energy stocks appeared to pre-empt a recovery in crude after four days of declines. Biotechs rebounded in the US.

ECONOMIC NEWS: The Reserve Bank releases its six-monthly Financial Stability Review at 11.30am EST. Tonight's US highlights are preliminary October consumer sentiment data and inflation expectations, JOLTS Job Openings, industrial production, capacity utilisation rate and long-term purchases.

Good luck to all.