Market wrap: Global markets slumped overnight after poor US job figures dented hopes for an economic recovery this year.
European stock indexes fell 2.5 - 3.8%. In the US, key indexes completed a third straight week of falls. The Dow Jones lost 2.63%, the S&P 500 was down 2.91% and the Nasdaq 2.67%. Commodity markets were also hit.
The rout came as unemployment in the US hit 9.5%, its highest level in 25 years. Nonfarm payrolls shed 467,000 jobs in June, much more than the 350,000 that economists expected. Trade on the New York Stock Exchange was extended by 15 minutes because of "system irregularities".
Crude oil futures tumbled 4% to a one-month low, recently trading at $66.29. Gold slid as the US dollar rose, dropping $10 or 1% from yesterday morning's price to recently trade at $930.20. Most base metals were lower, except nickel, which continued to buck the trend.
Futures traders expect a sea of red when our market opens. With 30 minutes left to trade, the SPI was down 76 points at 3785.
So a tough session lies ahead. Unfortunately, the US is on holiday tonight, so those job numbers will hang over Monday's trading as well. There are ugly rounding tops developing on many stock indexes - and we know what happened the last time they showed up two years ago. Gulp.
TRADING THEMES TODAY
DEFENSIVE STOCKS: When the economic outlook deteriorates, the pros rotate out of cyclical stocks into defensive sectors like health care (COH, CSL, HSP, PRY), consumer stocks (FGL, DJS, HVN, WOW, JBH) and telecoms (TLS, SGT). These are likely to outperform other sectors today, but that doesn't guarantee they will rise - just that they are likely to fall less.
BOUNCE TRADES: Panic creates opportunity for the patient and cool-headed. There will be scalping opportunities in the first half hour as some shares become seriously oversold. Look for shares near support levels that have been falling for a few days and are due a bounce. Use a tight stop loss and sell without hesitation if the market moves against you. Don't be greedy - today is a day for quick snacks.
SAFETY: If you don't need to trade, don't. The safest place to be is on the sidelines unless you're able/willing to short sell or know how to ride the turbulence. These are dangerous days to trade. Stay safe.
