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More records for gold as investors get worried about the health of credit markets, banks and the US dollar.

The Australian share market closed flat today, following another day of nervous trading as global woes continue.

Even though there were strong finishes for gold and oil and several other commodities on Friday night, traders reported a rise in contract close outs after Bear Stearns was bailed out on Friday.

The futures market was pointing to a lower opening when trading resumes here today after Wall Street’s big fall off the back of the rescue of investment bank, Bear Stearns.

The likelihood of Bear Stearns remaining independent after being bailed out by the US Federal Reserve is remote.

Tuesday night’s meeting of the US Federal Reserve was shaping up as the major factor to keep an eye on this week but Friday’s bailout of Bear Stearns, the 5th biggest investment bank, has changed that.

There have been some interesting developments occurring in the resources sector recently. Despite fears about US economic growth and whether the country has entered recession, many commodity prices continue to make all-time highs. Two in particular, gold and oil, have been gaining most of the headlines.

Make no mistake, we are in the grip of a vicious bear market. In bear markets, investors can do one of two things. Succumb to fear and ‘get out’; or be very careful, preserve capital as best they can, and be ready to take advantage of the attractive stock prices that bear markets inevitably produce.

In these turbulent times, investors need to use all of the tools at their disposal to protect their capital and find profit table trading opportunities.

The Fed’s latest move to combat the credit crunch has set off a short-covering rally in share markets, although so far it’s looking rather shaky. Yesterday it turned into another bear trap here with a savage day on the market with a 2%-plus fall.

Stockmarkets fell, the US dollar did likewise and interest rates on US Government securities were mixed as more problems emerged in markets around the world.

You wouldn’t normally expect President George W Bush to understand irony, especially irony generated by the markets.

A week ago yesterday’s labour force figures would have had economists and analysts running for the hills growling ‘rate rise coming, rate rise coming’.

The share market finished 1% higher today, buoyed by surging resource stocks which rallied after the price of gold broke through $US1000 per ounce overnight.

Is this what lies ahead for us in Australia?

Well, it was either good news, or slightly not so good news.

The Fed’s latest attempt to ease seized-up credit markets marks its most direct effort yet to repair the mortgage meltdown (and slumping house prices) that poses the biggest threat to the economy.

While the Fed promised to open the taps and markets responded, in Australia consumers have already voted and are now the gloomiest they have been in 15 years.

Australia’s employment growth surpassed all expectations, with figures out today showing the number of employed Australians has hit a 33-year high.

A mix of unfavourable domestic data as well as weaker global markets played havoc with investor sentiment today, pushing the Australian shares down by more than 2%.

As expected China’s February inflation rate leapt on the impact of bad weather and high prices for energy and food.

The Australian and New Zealand dollars declined a third day yesterday against the US currency, and lost ground against a surging yen, as concerns credit-market losses are mounting prompted investors to sell higher-yielding assets.

Despite signs of a slowing rate of economic activity and perhaps a slight easing in jobs pressures, the financial markets continue to be gripped by the credit freeze.

The Australian share market did a nice bounce today, with steep gains in the mornings led by the strong Wall St result overnight, and then eased down slightly towards the end of the day.

After the general election at the weekend, Malaysia is now in uncharted territory, with the government facing real opposition for the first time since 1969, when the National Front was denied a two-thirds supermajority in parliament.