daytrade diaries... november 9

Morning traders.

Market wrap: Stocks are set for a soft open this morning after last week's rally on Wall Street tripped over bleak employment figures.

Futures traders expect our market to open marginally ahead after the major U.S. indexes eked out narrow gains on Friday. The SPI futures index closed 4 points higher at 4605.

But it could have been much worse as America faced its highest unemployment rate since Reagan was in the White House in 1983 - 10.2%. The 22nd straight monthly decline in non-farm payrolls was worse than analysts expected and saw U.S. stock indexes open low and struggle in and out of positive territory. The Dow eventually closed 0.17% higher, the S&P 500 up 0.25% and the Nasdaq +0.34%.

The news was marked by a flight to safety, with oil and other commodities sold down but gold attracting buyers. The airline sector rallied hard on the falling oil price, up 4.44%. Precious metals miners gained 1.83% and biotechs 1.1%. Financial stocks, REITS and oilers all closed red.

The major European markets wobbled after the US unemployment report but most closed higher. Britain's FTSE rose 0.33% and Germany's DAX closed 0.13% higher but France's CAC lost 0.04%.

Gold futures set a new record high on expectations that the unemployment rate points to low US interest rates for a long time to come. The spot price spiked through $1,100 an ounce and last traded at $1,096.90. Crude oil went the other way as traders fretted over weak US demand so long as unemployment stays high. Crude futures dropped nearly 3% to $77.65 a barrel.

Base metals also lost ground. "The U.S. economy is not recovering at the pace everyone would like it to," said a head of base metals quoted on Reuters. "Fundamentals are beginning to weigh on people's minds, with rising stocks seeping into the market." In London, aluminium slid 0.88%, copper 0.46%, lead 3.63%, nickel 2.73%, tin 2% and zinc 2.21%.

TRADING THEMES THIS WEEK

GOLD: The uptrend looks healthy and well supported by fundamentals. Weak US employment = low interest rates = pressure on the US dollar = high demand for gold. Another record close on Friday should translate into further gains for our gold sector this week.

US OUTLOOK: Friday's action in the US was remarkable for the strength of the buying in the face of worse-than-expected employment figures. That's a bullish signal that investors think the worst is nearly over. But just how good is the outlook for US companies with unemployment at 10.2%? Other markets told a different story: falling oil and base metals will take a toll on our market this week if Friday's retreats gather momentum. I remain cautious.

ECONOMIC NEWS: There are a couple of potential market-movers due at 11.30 am today: October home loans and jobs ad data. Also today, RBA Assistant Governor Phil Lowe makes a speech at 2.20 pm. There's little of interest in the US tonight but the back-end of the week brings a budget statement, consumer confidence and trade balance figures. Also of interest this week: Wednesday brings the monthly swag of Chinese economic indicators.

Good luck to all.