daytrades march 21 pre-market

Morning traders.

Market wrap: Australian shares will start the week clouded by a weekend of western strikes against Libya, Japan's struggle to contain the crisis at its Fukushima nuclear plant and further monetary tightening in China.

The June SPI futures contract closed 18 points or 0.39% weaker on Saturday morning at 4629, a three-point premium to the XJO's closing level on Friday. However, today's market direction will depend in part on how the oil price reacts to two days of air and sea strikes against Libya and news that civil unrest has spread to Syria.

US stocks logged a second straight day of gains on Friday following the G7 intervention in Japan and the promise of larger bank dividends following a change of stance from the Federal Reserve. The financial sector steered the S&P 500 to a 0.43% rise for the day but the benchmark index finished a volatile week 1.9% lower. An initial triple-digit rally on the Dow ended as an 84-point or 0.71% gain and the Nasdaq added 0.29%.

European and US airplanes and battleships have attacked Libya's air defences for a second night to enforce a no-fly zone imposed following a United Nations resolution. Hopes for a swift conclusion to the campaign received setbacks as Libyan leader Moamar Gaddafi vowed to wage a "long war" and the head of the Arab League condemned the attacks as exceeding the terms of the UN resolution. Amr Moussa has called for an emergency meeting of the Arab League to discuss the situation.

Oil closed moderately lower on Friday in erratic trade after Libyan forces agreed to a cease-fire that was later violated. Crude oil futures finished the session 35 cents or 0.3% weaker at $101.62 a barrel.

Gold continued to benefit from geopolitical uncertainty surrounding the Middle East and the G7's intervention in currency markets to weaken the yen. Gold for April delivery rallied $US11.90 or 0.9% to $US1416.10 per ounce.

"There's a lot of volatility in the currency markets right now and gold is a good play to hedge not only currency risk but event risk," the head of trading at Kingsview Financial in in the US told Dow Jones Newswires. "Given the geopolitical backdrop, gold is going to remain very supported for the foreseeable future."

The recovery in copper faded on Friday after China raised lenders' reserve requirements for the sixth time as the central bank tries to rein in inflationary pressures.

"This is definitely taking the sheen off the market," a Standard Bank analyst told Reuters. "The fact that this is the sixth time that China's bank intervenes is more important than the fact that it is a 0.50 point increase only."

In London, copper eased 0.2%, but aluminium added 1.4%, lead 0.9%, nickel 3%, tin 1.1% and zinc was flat.

The major European markets finished higher on Friday but around 3% lower for the week. On Friday Britain's FTSE added 0.39%, Germany's DAX 0.11% and France's CAC 0.63%.

TRADING THEMES THIS WEEK

OIL: Shares seem likely to resume their inverse relationship with the price of oil this week as fighting in Libya temporarily replaces Japan's nuclear crisis as the main focus of international attention. The question this morning is how sharply will oil respond to events over the weekend? Western intervention in Libya may have come too late to revitalise the rebellion against Gaddafi's regime and may merely prolong a bloody civil war that will destabilise the region for months or even years to come. Arab League support was crucial to securing the UN resolution to impose a no-fly zone and any breach in that support could have uncomfortable consequences for the west in the weeks ahead.

FUKUSHIMA: It should be obvious by now that the crisis at Japan's crippled nuclear plant will drag on for some time, adding another level of uncertainty to jittery world markets. Australian uranium stocks recovered strongly from their mid-week lows but will remain hostage to developments at Fukushima. Cooling systems at two out of the facility's six reactors are reported to be working now. The Japanese share market is closed today for a bank holiday, denying our market one of its major leads.

ECONOMIC NEWS: A slow week for scheduled local news offers nothing significant until Thursday's leading index of economic indicators and Reserve Bank financial stability review. Japanese markets are closed today for a bank holiday. This week's key releases in the US are: existing-home sales (tonight); new-home sales (Wed); jobless claims, durable-goods orders (Thu); Q4 GDP revision and consumer sentiment (Fri).

Good luck to all.