Daytrading Dec 22 pre-market

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    Morning to any hard-core traders hanging in for the run-in to Christmas. Thanks Trees and after-market regulars.

    Market wrap:

    A rebound in commodities and Wall Street's best three-day advance in three years point to a fourth day of gains on the ASX.

    The March SPI 200 futures contract rose 17 points or 0.3% to 5329 as oil, iron ore and copper rallied at the end of a volatile week and BHP and Rio Tinto gained for a fourth session in the US.

    US stocks extended their best two-day rally with further gains on Friday, closing near record levels despite last-minute profit taking. The S&P 500 closed ten points or 0.47% higher at 2,071 after running as high as 2,078. The index put on 3.4% for the week, its best return since October, after Wednesday's Federal Reserve meeting ignited a sharp turn-around in sentiment. The Dow added 27 points or 0.15% on Friday and the Nasdaq 17 points or 0.35%.

    With no major economic or corporate news to change the mood on the trading floor on Friday, the market continued to surf higher on the Fed's pledge to be patient in raising rates.

    “The Fed set the tone and that what’s fueling the market right now,” Stephen Carl, head equity trader at Williams Capital Group in the US, told Bloomberg.

    Energy and materials topped the US sector gains for a third straight day amid speculation that oil is establishing a bottom, reducing the recent turbulence in other commodity markets. Energy stocks rallied almost 10% in the US last week and materials 5%. The recovery in the US helped BHP and Rio Tinto bounce from multi-year lows at the start of last week. On Friday BHP rose 3.62% and Rio Tinto 2.39% in US trade after spot iron ore for import to China improved $1.50 to US$69.50 a dry tonne.

    Oil rebounded sharply from Thursday's five-year closing low. West Texas Intermediate crude oil for January delivery rose $2.42 or 4.4% to settle at US$56.52 a barrel. The momentum continued after settlement, pushing the contract price up 6.27% by the end of the session to US$57.77.

    The recovery in oil encouraged bargain-hunting and short-covering at the end of a rocky week for base metals. In London, copper bounced 1.3%, lead 1.3%,  tin 0.4% and zinc 2.5%. Aluminium and nickel both eased 0.3%. US copper for December delivery rose 1.5% or five cents to US$2.92 a pound.

    Gold made a modest dent in its losses for the week, but struggled to gain momentum as traders continued to favour riskier assets. Gold for February delivery edged up $1.20 or 0.1% to settle at US$1,196 an ounce on Friday. The contract declined 2.2% last week.

    European stocks extended their biggest one-day rally in three years during an uneven session on Friday. The Stoxx Europe 600 gained 0.37% as Germany's DAX dipped 0.25%, France's CAC lost 0.18% and Britain's FTSE rallied 1.22%. On Thursday the index surged 3%, the index's best session since November 2011.

    The dollar was this morning buying 81.61 US cents.

    TRADING THEMES THIS WEEK

    SANTA RALLY: The momentum on key world markets is all upwards right now, partly as a natural counter-reaction to the 'oil-crisis' plunge earlier this month and partly because Wednesday's Fed meeting was a mood-changer. With little in the way of substantial economic news scheduled, it's likely that markets will continue to cruise higher over the festive season, barring black swans. In Australia, the speculative end of the market was still reeling last week from broad market volatility and the recent sharp downturn in commodity prices, but interest should pick up now that positive momentum on the wider market is firmly established. Trading volumes will thin out this week, exaggerating moves in both directions.

    HOLIDAY TRADING HOURS: There are just two full days of trading left before the fat bloke comes down the chimney. Trading on Wednesday - Christmas Eve - ends two hours early at 2.10pm EST (including the closing auction). The market then closes for Christmas and Boxing Day.

    ECONOMIC NEWS: There is no significant domestic news scheduled this week. The highlights of a thin week in the US are: existing home sales (tonight); durable goods/core durable goods, final GDP new home sales (Tue night); and weekly jobless claims (Wed).

    Best wishes to anyone heading off on holiday this week. Good luck to the remaining traders.
 
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