Morning traders.Market wrap: A broad decline in US equities, oil...

Morning traders.

Market wrap:

A broad decline in US equities, oil and metals following downbeat American job news has Australian shares pointed lower this morning.

The September SPI 200 futures contract closed 14 points or 0.3% weaker at 4111 on Saturday morning as the US's benchmark share indexes fell for the second week in the last three.

The S&P 500 lost 0.94% on Friday and 0.6% for the week with all 10 industry groups retreating after the May jobs report confirmed a sharp slowdown in hiring from the first quarter. The Dow swooned 193 points before paring its loss to 124 points or 0.96% for the day and 0.8% for the week.

The US economy added 80,000 jobs last month, a mild increase from May's 77,000 positions but below the 100,000 median estimate in a Bloomberg survey of economists and well short of the monthly average of 226,000 new positions created in the first quarter of this year. Unemployment was steady at 8.2%.

"It confirms the view that the US economy is slowing," the chief investment officer of BMO Harris Private Bank in the US told Bloomberg. "We are creating jobs at about less than half the pace in the second quarter than we did in the first quarter, either because of influences from abroad or seasonal adjustments."

Companies most exposed to the economic cycle led the retreat. The Morgan Stanley Cyclical Index lost 1.3% and the resource sector fell 1.2%. Technology stocks slumped 1.8%, dragging the Nasdaq down 1.3%.

The US jobs news accelerated falls in Europe, where Spanish and Italian bond yields again flashed warning signals and Spain's benchmark share index slumped 3% for a second day. Spain's 10-year bond yield finished at 6.92% in a sign that bond traders feel the European Union summit did not do enough to reduce the risk of owning Spanish government debt. Germany's DAX fell 1.92%, France's CAC 1.88%, Spain's IBEX 35 3.1%, Italy's FTSE MIB 2.53% and Britain's FTSE 0.53%.

Commodities were caught in a rotation out of risk assets and into the perceived safety of the US dollar. Oil declined for a second day to finish lower for the eighth week in the last ten as the greenback hit a two-year high against the euro. West Texas crude for August delivery sagged $3.10 or 3.55% to US$84.12 a barrel and a weekly loss of 0.6%.

Industrial metals remained under pressure as last week's rate cut in China raised questions about the prospects for this week's economic reports. In London, copper eased 2.1%, aluminium 2.5%, lead 1.4%, nickel 3.3%, tin 3.4% and zinc 0.6%. US copper for July delivery gave up eight cents or 2.3% at US$3.41 a pound.

"We have a risk-off mentality, strong dollar and weak economic data, and that's why copper is off," a partner of commodity wealth manager LOGIC Advisors in the US told Reuters. "If you look across all markets, they are all reflecting fear and gloom about the economic prospect."

Gold sagged for a second session as its function as a safe haven was overshadowed by currency movements. Gold for August delivery fell $26.40 or 1.6% to US$1,583 an ounce

TRADING THEMES THIS WEEK

ALL EYES ON CHINA: With significant US economic news at a premium this week, a heavy schedule of Chinese data is likely to attract more attention than usual. Last week's rate cut by the People's Bank of China has analysts fretting that we could be in for some glum numbers, but the Chinese economy has an intriguing habit of never producing any figures that truly shock the market. (Ahem.) The schedule this week includes consumer and producer inflation data at 11.30am EST today, trade balance figures tomorrow, foreign direct investment data on Thursday and GDP, industrial production and fixed asset investment on Friday.

US EARNINGS SEASON: The second-quarter earnings season gets underway tomorrow morning with analysts expecting downbeat news. Analysts surveyed by Bloomberg predict profits declined last quarter for the first time since 2009, falling an average 1.8%. That sets the scene for the most interesting and potentially market-moving earnings season in several years. With expectations so modest, there may be room for upside surprises when Alcoa launches the season after the close of regular trade on Wall Street tomorrow morning. After that, we have to wait until Friday night for more heavy-hitters in the form of JPMorgan Chase and Wells Fargo.

EUROPE LIKELY BACK ON TRADER RADAR: Friday's bond market movements appeared to dash any hopes that the European Union summit had done enough to push Europe's debt crisis onto the backburner. Spain's 10-year yield climbed back towards the critical 7% level and Italy's 10-year yield regained the 6% mark. Euro-zone finance ministers meet tonight to firm up last month's action plan. In the absence of much US economic news this week, there is a danger that Europe will fill the vacuum.

ECONOMIC NEWS: A solid week in Australia includes: jobs ads (11.30am EST today); business confidence (tomorrow); consumer sentiment, home loans (Wed); and unemployment rate, employment change and inflation expectations (Thu). Highlights of a relatively light week in the US include: trade deficit (Wed); weekly jobless claims (Thu); and the producer price index, core PPI and consumer sentiment (Fri).

Good luck to all.