Market outlook for the day – Friday 3 September 2010

Global equity markets have had a strong run this week and trading is likely  be relatively more subdued this morning ahead of important US employment figures due out this afternoon. Global markets are marginally positive this morning and should support a slightly higher start for local equities today. There is economic data due out of the Eurozone in the form of PMI and Retail sales data releases but the big data figures to listen out for today are the US Non farm payroll figures for August and the latest unemployment rate figure in the US.

News in the financial press:

Business Day

- Unions face tough battle to sell state wage offer

   - Rate cut is not a done deal, Marcus implies

   - Engen could kick-start Africa expansion with Chevron deal

   - Discovery forecasts UK upswing as SA boosts profit

Business Report

- State eyes steel pricing law

   - Strike impasse costs 350 million rand a day

What happened yesterday?

South African Market

South Africa's rand rallied more than one percent to a more than three-week high against the dollar on Thursday, largely driven by an uptick in global risk appetite that also boosted other emerging market currencies. But the resource-heavy bourse snapped a three-day winning streak, taking a breather despite gains in gold stocks. Financial markets largely shrugged off a three-week old public sector wage strike that looked set to drag on indefinitely after workers rejected a revised offer from the government.

Wall Street

U.S. stocks rose on low volume on Thursday as data showed improvement in housing and the job market a day ahead of the critical monthly payrolls figures. Investors built on Wednesday's sharp advance as indicators provided the latest reason for optimism the economy could avoid another downturn. But the nascent rally could be derailed if Friday's jobs data disappoints investors.

Global Markets

Asian stocks squeezed higher on Friday but gains were tentative ahead of all-important U.S. jobs data that tends to swing markets. There was no missing the sombre mood ahead of the employment report at 1230 GMT which will add to the debate on whether the U.S. economy is headed for a second recession.

Commodity and currency report

Gold prices were steady on Thursday, with buyers cautious on the physical market, as investors wait for key U.S. job data due later in the day for further clues on health of the economy. Data released on Thursday showed a surprise rebound in pending sales of previously owned homes in July, as well as a fall in new jobless claims last week in the U.S. But the August U.S. non-farm payroll figures during Friday, expected to show loss of 100,000 jobs, might dampen recovery hopes raised by this week's positive data and spur safe-haven demand in gold.

The Relative Strength Index, or RSI, stood at 68.065, just below the 70 level which is seen to mark an overbought market. Despite the market's bullish sentiment, holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, fell for the first time in a week on Thursday with a sizable decline of 9.12 tonnes, the largest one-day drop since late July. But dealers traced it to profit-taking by some fund investors.

Spot gold was little changed at $1,249.60 an ounce by 0311 GMT, just $15 below the record high of $1,264.9 hit in June. It is heading for a weekly gain of 1.1 percent, its fifth straight week of rises. U.S. gold futures for December delivery edged down 0.1 percent to $1,251.7.

Spot silver is posed to rise for the second week in a row, building on last week's nearly 6 percent ascent. Silver stood at $19.59 an ounce, barely changed from Thursday. Platinum rose 0.3 percent to $1,548 an ounce, on course for a 1.4 percen gain from a week earlier. Asian stocks edged higher on Friday but gains were tentative ahead of the U.S. data release.