daytrades june 29 pre-market

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    Morning traders.

    Market wrap: The strongest session in the US in two months and a rebound in commodities have set up Australian shares to open more than 1% higher this morning.

    The September SPI futures contract ended the night session 52 points or 1.16% ahead at 4522 as optimism over a solution to Greece's debt crisis drove Wall Street to a second night of gains.

    The Dow had its best session since April 20, climbing 145 points or 1.21% following reports that the German government will sit down tonight with the nation's biggest banks and insurers to thrash out terms for another Greek aid package. The S&P 500 put on 1.29% as strong earnings from Nike encouraged traders to buy beaten-up retailers. The Nasdaq added 1.53%.

    The Greek parliament is scheduled to vote tonight on Prime Minister George Papandreou's plan to reduce spending and sell assets to secure further loans from the European Union and International Monetary Fund. The EU is asking holders of Greek debt - primarily German and French banks - to agree to roll over at least 30 billion euros of bonds.

    "With the German banks on board, you find the solution which alleviates some of the European debt problems," the senior investment officer for Chemung Canal Trust in the US told Bloomberg. "If you can get beyond that sovereign crisis, then confidence comes back and we can see a rally in risk assets."

    US traders overlooked more glum domestic news. Consumer confidence sagged to a seven-month low and home prices sat at a 17-month low, despite a modest pick-up in April.

    A recovery in the euro pressured the dollar and encouraged a move back into "risk assets", including commodities and the Australian dollar. The Aussie rallied nearly a cent to US $1.0539.

    The S&P GSCI Index of 24 commodities had its biggest rise this month, climbing 2.2%. Crude for August delivery rose $2.61 or 2.9% to US $93.23 a barrel.

    Industrial metals moved higher, helped by signs of a pick-up in Japanese demand as the country recovers from the March earthquake and tsunami. In London, copper rallied 1%, aluminium 0.4%, lead 0.5%, nickel 1.8%, tin 1.2% and zinc 1.35%. US copper was recently up 1.1%.

    Precious metals broke a three-session losing run. Gold for August delivery gained $5.50 or 0.4% at US $1,501.90 an ounce. Silver for July delivery rose 36 cents or 1.1% to US $33.94 an ounce.

    "Gold and commodities have a positive relationship," an investment analyst at Phillip Futures in Singapore told MarketWatch. Gold "is taking its cue from crude oil as well as copper. If there's greater optimism, then commodities rally."

    The major European markets rode the new mood of optimism about Greece, even as riots broke out in Athens as Greek unions began a two-day strike. Britain's FTSE advanced 0.78%, Germany's DAX 0.88% and France's CAC 1.46%.


    RISK ON: Is the tide turning? US traders certainly think so, driving the US to its best back-to-back rises in some months. Admittedly we saw a similar move in the US at the start of last week that quickly floundered but this feels more promising. Much will depend on the rest of the week's developments in Europe - the Greek parliament still has to pass austerity measures to gain the next tranche of EU/IMF loans, and Germany and France need their banks to agree to roll over loans to avoid a Greek default. There are no guarantees, but the risk trade was certainly back on overnight and that bodes well for our mining sector today.

    SHORT-COVERING?: The shorts have had an easy ride over the last two months but may finally come under some pressure today. Maybe. The daily pattern on the local market for weeks has been big opens followed by steady fades - that's evidence that every rally is being sold into. As Exit pointed out, yesterday was no different. The prevailing downtrend will continue until that pattern is broken. Is today the day? Look for explosive rallies in the most beaten-up larger stocks as the shorts cover their positions. If that happens, we just might be at a short-term turning point. If!

    ECONOMIC NEWS: Nothing scheduled here today, but Japanese industrial production figures are released at 9.50 am AEST. A light schedule tonight in the US includes pending home sales and crude oil inventories. Tonight's main event is the vote in the Greek parliament on a five-year austerity plan.

    Good luck to all.
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