daytrading may 7 pre-market

Morning traders. Tin hats on.

Market wrap:

Australian stocks will open deep in the red after overnight European election results added to an uncertain market outlook following Wall Street's worst week of the year.

The June SPI 200 futures contract sank 51 points or 1.2% to 4340 on Saturday morning as disappointing US jobs news helped US stocks decline for a third day and oil sag to a 12-week low. The pressures may have increased overnight after voters in France and Greece swung away from pro-austerity parties, ousting French President Nicolas Sarkozy and turning on the ruling coalition in Greece.

The S&P 500 capped its biggest weekly decline of 2012 with a plunge of 1.61% on Friday after the economy added fewer jobs than expected in April. The Dow gave up 168 points or 1.27% as all 30 components lost ground. The Nasdaq swooned 2.25% as Apple, its largest component, also suffered its worst week of the year.

Payrolls increased by 115,000 last month, the smallest number in six months and short of the 160,000 predicted by economists. Investors ignored a drop in the unemployment rate to 8.1% and upwards revisions to figures from previous months. The data was the latest in a recent run of "negative surprises" that has raised questions over the strength of the US economic recovery.

"The data point to sluggish job growth, declining labour market participation and for those employed, stagnant purchasing power," the chief executive officer of Pacific Investment Management in the US told Bloomberg. "Consumption is less dynamic at a time when headwinds from Europe and a potential fiscal cliff are still material."

Also weighing on sentiment on Friday was uncertainty over weekend elections in France and Greece, and a sharp decline in euro-zone business activity. The Markit euro-zone purchasing managers' index fell to 46.7 from 49.1 in March and helped push Germany's DAX down 1.99%, France's CAC 1.9% and Britain's FTSE 1.93%.

Oil was one of the more striking victims of a "risk-off" session as investors abandoned most commodities for the safety of the US dollar, treasuries and to a lesser extent, precious metals. West Texas crude ended its worst week since September down 6.1% and at its lowest level since February. Crude for June delivery fell $3.95 or 3.85% on Friday to US$98.59 a barrel.

"The jobs data was the [oil] bulls' last hope," a vice-president with PFGBest in the US told MarketWatch. "Now the market realises that with a slowing economy and weak demand we might drown in an ocean of supply."

Copper eased to its lowest level in a week but other metals were supported by Indonesia's decision last week to impose a new export tax. In London, copper fell 0.4%, aluminium 0.7% and tin 1.6%. Lead rallied 0.6%, nickel 1.7% and zinc 0.8%. US copper for July delivery eased one cent or 0.4% to $3.72 a pound.

Gold and silver found support as traders favoured "havens" ahead of weekend European elections. Gold for June delivery rallied for the first session in five, putting on $8.30 or 0.5% to US$1,643.10 an ounce. July silver rallied 31 cents or 1% to US$30.32 an ounce.

TRADING THEMES THIS WEEK

EUROPE VOTES AGAINST AUSTERITY: Votes in France and Greece overnight raised the spectre of a rerun of recent battles after voters turned their backs on the leaders who have steered their countries through the debt crisis. French President Nicolas Sarkozy is gone, ousted in favour of Socialist François Hollande who has vowed to renegotiate the fiscal compact his predecessor secured with German Chancellor Merkel. While that result was widely anticipated, the situation in Greece is less certain after voters moved away from the two main parties and towards far-left and far-right extremes. Read more here.

BUDGET WEEK: The domestic focus this week is on tomorrow night's federal budget, which may deliver more bad news for the mining community as Treasurer Wayne Swan struggles to deliver a promised surplus. There will be listed winners and listed losers. As always, the devil is in the detail.

US SLOWDOWN: Markets are looking increasingly edgy as investors question whether recent advances in equity prices are justified in the light of softening global economic data. The US, in particular, has had a soft run of economic reports. Perhaps fortunately, the first half of this week is light on US data. There are no major scheduled reports until Thursday's weekly jobless claims, trade deficit and import price index. Friday brings the producer price index, core PPI and consumer sentiment.

CHINESE OUTLOOK: Australia's biggest trading partner delivers potential market-moving news towards the end of the week. Trade balance figures are due on Thursday, followed by inflation, retail sales and industrial production on Friday.

ECONOMIC NEWS: A busy domestic schedule this week brings: building approvals, retail sales, job ads and business confidence (11.30am EST today); trade balance and Federal Budget (tomorrow); and employment change and unemployment rate (Thu).

Good luck to all.