Morning traders. Thanks Trees and after-market regulars. Market...

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

The share market is set to open at a fresh four-month low following two days of falls on Wall Street over the long weekend.

The June SPI 200 futures contract declined 34 points or 0.6% to 5468 this morning after closing three points in the red on Saturday.

Overnight, the S&P 500 fell 14 points or 0.65% to its lowest point in two months, closing below its 100-day moving average as traders wrestled with the same issues as last week: bond market volatility, Greece's debt crisis and the timing of the first rate rise in the US. The benchmark index fell three points or 0.14% on Friday night after a big jump in job creation increased the odds on a September rate rise. The Dow lost 83 points or 0.46% overnight and 56 points or 0.31% on Friday. The Nasdaq led last night's retreat with a fall of 47 points or 0.92% after bucking Friday's trend with a gain of nine points or 0.18%.

"Volatility is apt to increase in July and August as the market moves through the historical dog days of [the northern] summer, waits for the second-quarter results and, importantly, transitions to a likely Fed move in September," Terry Sandven, chief equity strategist at US Bank Wealth Management, told Reuters.

The likelihood of a September rate cut in the US jumped on Friday night after data showed the economy created 280.000 new jobs last month, the biggest increase in five months, as activity picked up after the northern-hemisphere winter. Analysts said the strength of the jobs market undermined the argument for leaving rates on hold following unexpected weakness in Q1 GDP.

“This only reinforces the view that the economy is a lot healthier than the GDP data imply,” Joe LaVorgna, chief US economist at Deutsche Bank, told Bloomberg. “How weak can the economy be when we’re generating this kind of job growth?”

Although bond markets steadied overnight, yields remained near multi-month highs after a sharp sell-off last week. The US dollar index was lately down 1.25% after US President Barack Obama was quoted as saying the rising dollar was a problem for the US economy. The President later denied making the comment. The Australina dollar was this morning buying 77.09 US cents.

Germany's major share index entered a technical correction overnight as Europe's benchmark fell for a fifth session as Greece's on-going failure to secure a new deal with its creditors continued to weigh. The Stoxx Europe 600 extended last week's 2.7% decline with a fall of 0.93% overnight. The index's five-session losing is its longest in a year. Germany's DAX gave up 1.18% overnight to push its decline from its April peak beyond 10%. France's CAC lost 1.28%, Britain's FTSE 0.21% and Greece’s Athex Composite 2.73%. Greece deferred a debt repayment to the IMF due last Friday while it continues to negotiate fresh bailout funds.

The Dow Jones Transportation Average turned sharply lower overnight, falling 2.06% after breaking a three-week losing run last week. Airline and tech stocks were two of the biggest drags on the US market overnight.

BHP fell 0.19% to a new seven-week low in the US overnight after falling 0.44% on Friday. Rio Tinto declined 0.87% last night and 0.48% on Friday. Spot iron ore for import to China was flat yesterday at US$63.80 a dry ton after gaining 30 cents on Friday.

Gold stocks rallied 0.62% in the US after the precious metal snapped a three-session losing run. Gold for August delivery settled $5.50 or 0.5% ahead at US$1,173.60 an ounce as traders sought havens from weakness in the greenback and US equities.

The energy sector declined 0.57% as OPEC's decision to leave its production limit untouched on Friday continued to weigh on crude.  West Texas Intermediate crude oil for July delivery settled 99 cents or 1.7% weaker at US$58.14 a barrel. Data yesterday showed Chinese imports were 11% weaker last month than the same month last year.
  
Most base metals rallied overnight as declines in the greenback encouraged holders of other currencies to take advantage of forex advantages. In London, copper bounced 0.2% after hitting its lowest level on Friday since late April. Lead improved 0.4%, nickel 1.8%, tin 0.9% and zinc 0.4%. Aluminium eased 0.03%. US copper for July delivery was recently up 0.3% at US$2.70 a pound.

TRADING THEMES TODAY

NEARING CORRECTION: No relief from Wall Street while most of us enjoyed a long weekend (sorry WA). Two falls, neither particularly heavy but the indexes closed at their lows and below important indicators, which implies there is more to come. The Australian share market has been front-running this global pullback so successfully that it ended last week within a couple of percentage points of a technical correction (defined as a retreat from its peak of 10%). The DAX got there last night and it looks increasingly likely we will follow in the days ahead. That said, Friday's ASX session was the most promising of the week, with the XJO showing signs that it is ready to rebound. Whether it can resist a pretty negative bag of leads today remains to be seen. Some of the steam came out of the spec market last week. That likely means fewer trading opportunities this week, but there is always something moving. A slew of potentially market-moving data is due at 11.30am EST - see below.

ECONOMIC NEWS: The delayed start to the trading week means we get domestic business confidence, job ads and home loans at 11.30am EST. China releases consumer and producer inflation figures at the same time. The US data flow is slower this week. Tonight's highlights are the JOLTS job openings, small business index and wholesale inventories.

Good luck to all.