Daytrading October 23 pre-market

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

Australian shares look set for a two-month high after earnings surprises and the prospect of further European stimulus measures fuelled strong gains on Wall Street.

The December SPI200 futures contract surged 78 points or 1.5% to 5310 as the Dow jumped more than 300 points, and BHP and Rio Tinto rallied with a rebound in industrial metals. The benchmark share index has not traded above 5300 since late August.

US stocks rose for the first time in three sessions after European Central Bank President Mario Draghi hinted the central bank may unveil more stimulus measures as soon as December. The news sparked a rally on both sides of the Atlantic. The S&P 500 jumped 34 points or 1.66% to close above its 100-day moving average for the first time in more than two months and extend its recovery from the August low beyond 10%. The Dow advanced 321 points or 1.87% and the Nasdaq 80 points or 1.65%.

“Today’s rally is definitely being driven by what the ECB did,” John Praveen, chief investment strategist at Prudential International Investments Advisers in the US, told Bloomberg. “That’s what’s really driving this rally and today’s risk-on environment. Earnings expectations were very, very low and it’s been easy to beat those expectations and that’s also been contributing to this rally.”

While the ECB left its key rate on hold, President Draghi made it clear that the bank is preparing to do more to boost sluggish growth and inflation in the euro-zone, including cutting the deposit rate and expanding asset purchases. Interest rate futures priced in a near-100% chance that the deposit rate will be lower by April. Read more here.

Europe's benchmark share index jumped more than 2% to a two-month high. The Stoxx Europe 600 put on 2.03%, Germany's DAX 2.48%, France's CAC 2.28% and Britain's FTSE 0.44%.

The euro plunged almost 2% to a two-month low against the greenback. Read more here. The US dollar index was lately up 1.42%. The Australian dollar was little changed despite the scale of the moves elsewhere, this morning buying 72.15 US cents.

Also helping the mood on Wall Street was a round of earnings 'beats' from the likes of eBay, McDonald's, Texas Instruments and Dow Chemical. McDonald's had its best session in seven years on signs that a new strategy is delivering results.

Raw materials and industrials were the pick of the sectors. BHP lifted 1.96% and Rio Tinto 2.07% in US trade. Spot iron ore for import to China yesterday slid 50 cents to US$51.40 a dry ton.

Health care was the only sector to lose ground as the fall-out from accusations of a profit rort at Valeant Pharmaceuticals continued and earnings disappointed. Shares in Valeant fell another 7.37%.

Economic data exceeded expectations. The four-week average of claims for unemployment benefits fell to its lowest level in almost 42 years after claims ticked up 3,000 to 259,000 last week. Sales of existing homes improved 4.7% last month to their second highest level in eight years.

News of an increase in Chinese imports and production cuts at Freeport-McMoRan helped copper rally. In London, copper put on 1.1%, lead 1.3%, nickel 1.5% and zinc 1.2%. Aluminium dipped 1.7% and tin 0.4%. US copper for December delivery was recently up 0.9% at US$2.38 a pound.

US energy stocks rose 1.8% even as the rising greenback capped a rebound in crude oil. West Texas Intermediate crude oil for December delivery settled 18 cents ahead at US$45.38 a barrel after rising as high as US$46.10.

Gold stocks were also swept higher by the bullish market mood despite pressure on the precious metal from the greenback. The NYSE Arca Gold Bugs index put on 2.1%. Gold for December delivery settled $1 or 0.1% lower at US$1,166.10 an ounce.

TRADING THEMES TODAY

ATTACKING RESISTANCE: The ASX has been marking time until a catalyst for a real crack at 5300. Well, this is the day, folks. The global market mood was buoyant overnight, giving the XJO a very good shot at kicking clear of these levels. It's unusual to see the greenback and US equities rally that much in unison, indicating something major was going on. The China deflation/Fed-rate-hold correction is well and truly behind us. Super Mario Draghi can take a lot of the credit after more or less promising to roll out the punch bowl at the ECB's December policy meeting. That prospect should put a floor under global equities in the meantime.

ECONOMIC NEWS: No significant domestic news scheduled today. China re;leases a leading index at 1pm EST. The flash manufacturing PMI is the only item of any note scheduled tonight in the US.

Good luck to all.