Morning traders.Market wrap: Stocks may open cautiously higher...

Morning traders.

Market wrap: Stocks may open cautiously higher this morning after a strong start to the US shopping season and modest falls on Wall Street on Friday.

The December SPI 200 futures contract closed 5 points or 0.1% stronger at 4008 on Saturday morning as futures traders speculated that the ASX priced in heavier overseas falls during Friday's sharp local sell-off. Traders may also take heart this morning from record "Black Friday" holiday sales in the US (see "US economy accelerates?" below).

European markets rebounded on Friday and US stocks were ahead for much of the holiday-shortened session before more worrying news out of Europe sparked a late sell-off. The S&P 500 fell for a seventh straight day, falling 0.27% to complete its worst "Thanksgiving week" since 1932. The Dow lost 26 points or 0.23% and the Nasdaq gave up 0.76%.

US stocks turned lower after Standard & Poor's cut Belgium's credit rating and reports emerged that Greece is demanding private creditors accept heavier losses as part of a rescue deal. Greece is said to be insisting on a 75% haircut for creditors, rather than the 50-something percentage figure reported in previous negotiations.

"The demands of Greece now totally change the game," a managing director at Southwest Securities in the US told Bloomberg. "The situation can no longer be called voluntary by any stretch of the imagination. The equity markets in the United States may test the lows again as there is increasing concern of a major recession in Europe."

European markets rallied despite further signs of stress in credit markets, where an Italian auction of six-month Treasuries produced an average yield of 6.5%, compared to 3.54% a month ago. Britain's FTSE rose 0.72%, Germany's DAX 1.19% and France's CAC 1.23%.

Commodity markets came under pressure from a rising US dollar but oil and most base metals advanced. Oil improved steadily throughout the session despite the rising greenback and a late slump in US equities. Crude for January delivery added $1.15 or 1.2% to reach US$97.32 a barrel.

Copper inched higher despite evidence of falling European demand impacting on Asian factory output. In London, copper added 0.1%, lead 0.4%, tin 1% and zinc 0.5%. Aluminium fell 1.3% and nickel 0.8%. US copper improved less than 0.1%.

Gold fell back as the rising greenback usurped the precious metal's "safe haven" role. Gold for December delivery fell $14.90 or 0.9% to US$1,681 an ounce.

TRADING THEMES THIS WEEK

US ECONOMY ACCELERATES?: This week is again likely to be a tug of war between signs of improvement in the US economy and trouble in Europe. Bulls will hope the focus is firmly on the former. Friday marked the traditional start of the Christmas shopping season in the US, which got off to a robust start. The closely-watched "Black Friday" sales were the highest ever, up 6.6% on last year, according to ShopperTrak. That's another hint that the US economy is picking up speed. This week brings a slew of data that may confirm that view, including consumer confidence (tomorrow), weekly jobless claims (Thu), non-farm payrolls and unemployment rate (Fri). See "Economic news" for more.

EUROPEAN BOND AUCTIONS: The biggest obstacle to a relief rally on equity markets this week is probably a string of European bond auctions involving Italy, Spain, France and Belgium. Demand erosion has sent bond yields for many countries towards the unsustainable levels where Greece, Ireland and Portugal were forced to seek bailouts. Investors need to see evidence that this crisis of confidence is easing or the only way for equities appears to be down. Italy has auctions tonight and tomorrow. Belgium also has an auction tonight and France and Spain hit the markets on Thursday.

CHINA SLOWDOWN?: Australian equities were undermined last week by unwelcome news of a sharp contraction in Chinese factory output. This week brings two reports that will either confirm or contradict that initial report. The final version of HSBC's manufacturing Purchasing Managers Index is due on Thursday, alongside the official government report, which tends to focus on larger manufacturers.

ECONOMIC NEWS: This week's domestic schedule includes: new home sales (tomorrow); private capital expenditure, private sector credit (Wed); and manufacturing index, retail sales and building approvals (Thu). A busy week in the US includes: new home sales (tonight); consumer confidence (tomorrow); productivity, unit labour costs, Chicago PMI (Wed); weekly jobless claims, ISM, construction spending (Thu); and non-farm payrolls, unemployment rate and average hourly earnings (Fri).

Good luck to all.