Shares are likely to open little changed after US stocks pared heavy losses on Friday following a dramatic slowdown in jobs growth.
The June SPI 200 futures contract ended the night session five points or 0.1% weaker at 4890 as traders bet that the Australian share market had pre-empted most of the decline on Wall Street.
The Dow turned an initial fall of 171 points into a final loss of 41 points or 0.28% on Friday as the prospect of a new corporate earnings season this week helped traders look beyond the worst government jobs report in nine months. The S&P 500 lost seven points or 0.45% for a weekly loss of around 1%, its worst performance of the year. The Nasdaq dropped 0.65% on the day and roughly 2% for the week.
A week of worrying signals from the US jobs market ended with the Labor Department's monthly jobs report showing the economy created just 88,000 new positions in March, down from a revised 268,000 in February and less than half the number that economists had expected. Unemployment improved to 7.6%, the lowest rate in five and a half years, from 7.7%, but the drop was attributed to a slide in the participation rate. Read more here.
"The number is disappointing and moderately concerning, but one month does not make a trend," the regional chief investment officer for Wells Fargo Private Bank in the US told Bloomberg. "Yes, it's a miss and it's worth focussing on, but we don't think it changes our forecast for a modest improvement in employment this year. It [was] a good day to buy stocks because it made the markets nervous."
There were further signs of rotation out of cyclical assets into defensive sectors. The Morgan Stanley Cyclical Index fell 0.57% for a weekly decline of 3.3%. The Russell 2000 index of small caps lost 0.26% on the day and 3% for the week. Australia's big two miners suffered mixed fortunes: BHP rallied 0.33% in US action while Rio Tinto gave up 0.31%.
European markets caught the initial dive on Wall Street, but closed before the rebound gathered momentum. Germany's DAX slipped 2.03%, France's CAC 1.7% and Britain's FTSE 1.48%.
Gold was a stand-out as the US dollar slumped, pushing traders towards alternative stores of wealth. Gold for June delivery rallied $29.40 or 1.9% to US$1,581.80 an ounce trimming the damage from a week-long retreat to 1.2%. Silver for May delivery rallied 51 cents or 1.9% to US$27.28 an ounce.
Oil finished off its low, in line with US equities, but ended with a weekly loss of 4.7%. On Friday West Texas Intermediate crude for May delivery ended 21 cents or 0.2% weaker at US$93.05 a barrel after falling as low as US$91.85.
Most industrial metals lost ground in London as the US data added to concerns over soft Chinese demand. Copper dipped 0.5%, aluminium 0.3%, lead 1.4%, nickel 0.9% and zinc 0.3%. Tin rallied 0.6%. US copper for May delivery eased 0.1% or less than a cent to US$3.35 a pound.
TRADING THEMES THIS WEEK
US EARNINGS SEASON: After last week's dire run of US data, we could hardly ask for a more timely quarterly reporting season to swing the spotlight from economics to earnings. The first-quarter season gets underway with Alcoa after the close of regular trade on Wall Street tomorrow and accelerates towards the end of the week with the likes of JPMorgan and Wells Fargo. Expectations are once again muted by the slow pace of the economic recovery in the US, allowing room for upside surprises. Read more here.
BERNANKE AT THE PULPIT: Federal Reserve chairman Ben Bernanke has a busy week ahead with speeches at either end and the minutes from the last Fed meeting due on Wednesday night. That's likely a positive for world markets because the Fed chief has the happy knack of telling Wall Street what it wants to hear.
SPOTLIGHT ON CHINA: This week brings further indicators to the state of the Chinese economy: inflation figures tomorrow and trade data on Wednesday.
NORTH KOREAN WILDCARD: The hermit kingdom has a long history of rattling sabres at imagined enemies, so there's no reason yet to think this latest episode is anything more than rhetoric. However, there is always the danger that the new leader will feel obliged to do something audacious to cement his position as the latest "strong man" of the peninsula. In other words, there is remote potential for a short, sharp shock to world markets, although the long-term effects would likely be minimal. In the current climate of easy money, many would view such an event as a buying opportunity.
ECONOMIC NEWS: A busy week of domestic data includes: AIG construction index at 9.30am EST and ANZ job ads at 11.30am (both today); business confidence (tomorrow); consumer sentiment (Wed); and employment change, unemployment rate and inflation expectations (Thu). US highlights include: a speech by Federal Reserve Chairman Ben Bernanke (tonight); minutes from the last Fed meeting (Wed); weekly jobless claims (Thu); and retail sales/core retail sales, producer price index/core PPI, preliminary consumer sentiment and another speech by Fed head Bernanke (Fri).
