Morning traders.Market wrap: A mixed end to Wall Street's worst...

Morning traders.

Market wrap: A mixed end to Wall Street's worst week in two months points to a flat start to Australian trade this morning.

The December SPI 200 futures contract closed one point higher on Saturday morning at 4182 as falls in US technology and energy stocks were balanced by a modest increase among blue chips.

The Dow rallied 25 points or 0.22% as European bond yields fell and US economic indicators signalled an acceleration in the economy next year. But reports that Germany is preparing for euro-zone sovereign defaults helped cap the S&P 500 at -0.04% and weakness among tech stocks sent the Nasdaq down 0.6%.

"Until we have some sense of stability in Europe, the volatility will continue," a manager at Security Global Investors in the US told Bloomberg. "Better economic growth in the US will provide support for the markets and potentially set the stage for a nice rally if and when Europe does stabilise."

An index of leading indicators beat economists' expectations, suggesting that the US economy will end the year growing at the fastest pace in 18 months. Several analysts upgraded their GDP outlooks following the report.

Bloomberg reported that European Central Bank intervention helped push down Italian and Spanish bond yields on Friday, but the major European markets ended in the red as funding costs for European banks continued to increase. Britain's FTSE fell 1.11%, Germany's DAX 0.85% and France's CAC 0.44%.

Oil continued to fall back from its brief foray above US$100 a barrel on low holiday-style volume. Crude for December delivery fell $1.14 or 1.15% to US$97.79 a barrel.

A modest decline in the US dollar helped gold scratch out a gain late in the session. Gold for December delivery increased $5.80 or 0.3% to US$1,726 an ounce.

Most industrial metals improved in London trade, but copper ended lower for a third week as the European crisis continued to crimp demand. In London on Friday, copper added 0.2%, aluminium 1.6%, lead 2.3%, tin 0.4% and zinc 1%. Nickel fell 2.2%. US copper rallied 0.6%.

TRADING THEMES THIS WEEK

WEEKEND SPANISH ELECTION: A hopeful sign for equity markets this morning is reports that an overnight election in Spain has delivered a mandate to the conservative Popular Party. This is likely to be seen by investors as a positive because the reformist PP has been calling for tougher austerity measures and is more likely to be favoured by bond markets. More here.

US DEBT SQUABBLE: Predictably, time is running out for a deal to reduce the US deficit. The deadline for a congressional "super-committee" to deliver a plan to reduce the US budget by US$1.2 trillion is Wednesday. Bloomberg is this morning reporting that the two political parties remain deadlocked. Whether the market will be remotely surprised or indeed will care remains to be seen. Failure to reach an accord by Wednesday will automatically trigger budget cuts of US$1.2 trillion in 2013.

HOLIDAY-SHORTENED WEEK IN US: Wall Street is closed for the Thanksgiving public holiday on Thursday and many traders will also take Friday off. The holiday means this week's US news flow is weighted to the first half of the week (see below) and also suggests low-volume finishes to the trading week here and in the US.

CHINESE MANUFACTURING: Our market pays close attention to manufacturing output from our largest trading partner, which feeds directly into demand for Australian raw materials. Wednesday brings the monthly flash manufacturing report from China. Last month's report indicated a slow upturn in the sector, albeit at a pace well below last year's readings.

ECONOMIC NEWS: A slow week for scheduled domestic news includes: a speech by Reserve Bank Assistant Governor Guy Debelle at the Australian Securitisation Forum at 2.10 pm AEST today and the leading index and quarterly construction work on Wednesday. Highlights of this week's holiday-affected US schedule include: existing home sales (tonight); GDP (tomorrow); and weekly jobless claims, personal income, consumer spending, core PCE price index, durable goods orders and consumer sentiment (Wed).

Good luck to all.