Daytrading October 5 pre-market

Morning traders. Thanks Rx7 and after-market regulars.

Market wrap:

Australian shares look set to recoup Friday's losses after US stocks staged their biggest reversal in four years as weak jobs data appeared to push rate hikes into next year.

The December SPI200 futures contract bounced 67 points or 1.3% to 5098 during a volatile session where the Dow fell as much as 259 points before reversing to a final gain of 200 points or 1.23%. The 459-point intraday swing was the index's largest since October 2011.

Resource stocks led the rally as the S&P 500 rose for a fourth day. The benchmark index put on 28 points or 1.53%. The Nasdaq surged 81 points or 1.74% as biotechs rebounded.

Stocks plunged at the open after the closely-anticipated September jobs report showed the economy added just 142,000 positions last month. Economists had predicted growth of 200,000. The overall picture was made worse by a downward revision to August figures to 136,000 from an original estimate of 173,000. Together, the two monthly reports were the weakest in three years. Read more here. Unemployment held steady at 5.1%. Adding to the gloom about the US economy, orders for US-made factory goods fell 1.7% in August, almost twice what economists expected.

“The initial knee-jerk reaction when stocks tumbled was understandable given how weak the jobs report was. What markets really wanted was a goldilocks economy, growing steadily but not too fast. A slowdown like this was not priced in,” David O’Malley, CEO of Penn Mutual Asset Management in the US, told MarketWatch. “A rebound may be due to realisation that the Fed is not going to raise rates this year."

The US dollar index initially fell more than 1% as forex traders revised their expectations for the timing of the first rate increase in the US. The odds on a hike in December fell to 30% after being as high as 100% earlier this year. The dollar index recovered most of its fall to end the session 0.19% in the red. The Australian dollar was this morning buying 70.62 US cents.

Energy and materials were the pick of the industry groups as the weak greenback boosted commodity prices. BHP Rio Tinto both rallied 3.02% in US trade, closing at two-week highs.

Biotechs and health care were other stand-outs, with the iShares Biotechnology Index reversing a 2% decline to end the session 3.47% ahead.

"All of the negativity is already out there," Paul Yook, portfolio manager at BioShares Funds in the US, told CNBC. "We're really trying to set a strong bottom in biotech."

Traders piled into gold stocks, driving the NYSE Arca Gold Bugs index up 8.32% as gold jumped more than 2% to its first advance in six sessions. Gold for December delivery settled $22.90 or 2.1% ahead at US$1,136.60 an ounce.

The US energy ETF jumped 4.13% after data showed the number of drilling rigs deployed in the US fell to a 13-year low last week. West Texas Intermediate crude oil for November delivery settled 80 cents or 1.8% higher at US$45.54 a barrel.

The slide in the greenback helped base metals pare falls on the London Metal Exchange. London copper closed near flat after being off as much as 1.7%. Aluminium lost 0.5%, lead 0.4%, nickel 0.5% and zinc 0.2%. Tin gained 0.9%. US copper for December delivery rallied 1.8% to US$2.37 a pound.

European stocks mirrored the initial plunge on Wall Street and closed partway through the reversal. The Stoxx Europe 600 was ahead 0.47%, Germany's DAX 0.46%, France's CAC 0.73% and Britain's FTSE 0.95%.

Spot iron ore for import to China eased 50 cents on Friday to US$54 a dry ton.

TRADING THEMES TODAY

REVERSAL OF THINKING: Did we see a sea-change in Wall Street thinking on Friday? After weeks of bad economic news being seen as market-unfriendly because traders want the Fed to get on with the first rate rise, on Friday bad economic news appeared to revert to being seen as market-friendly because it means cheap borrowing for longer. Go figure. The result was a massive swing session that would have delivered enormous profits to anyone who read it right. We're nicely set for a big open here, but volumes are likely to be significantly depressed by public holidays in NSW, SA, Qld and the ACT. (Doubt there will be much trading activity in Townsville today. Congratulations to the Cowboys.) Resources got a handy leg-up from weakness in the US dollar - gold miners had a stellar session. Biotechs finally saw some relief from two weeks of heavy selling, but it's too early to declare a change in short-term trend.

ECONOMIC NEWS: A busy day for second-tier domestic data includes the AIG Services Index at 9.30am EST, inflation gauge at 10.30am and job ads at 11.30am. US highlights are rival services PMIs and the labour market conditions index.

Good luck to all.