CMC Markets Weekly Report

The ASX 200 rallied to close higher into the end of the week, although unconvincing, as sellers once again emerged to stifle recovery through the 5000 level. Negative sentiment still plagues the market, especially through the financial sector.

This week the outlook for the market remains clouded in uncertainty. The SPI Futures closed down 74 points on Friday night on back of an extremely volatile trading session in the US. The continuing volatility created once again by the ongoing worries of the 2 largest US mortgage lenders, and the contradictory statements from the Federal Reserve and US Government regarding their support for Fannie Mae AND Freddie Mac.

Overlapping these concerns is the spectre of higher oil prices. Oil rallied to new record highs, $147.27bbl as rumours of Israeli Jet fighter activity over Iran and the continued demise of the $US.

The week ahead will offer little respite for Global Equity markets .The release of UK and US Inflation numbers midweek will gain much attention from the Central Banks and the markets. The PPI and CPI release will give some indication of the magnitude of the problem facing central banks as they try to control slowing growth, spiralling inflation and ongoing cost of credit.

Also this week in the US, the reporting season will continue. The forward earnings of the companies will be the main focus.

Domestically, the RBA releases its Boards minutes on Tuesday, and on Wednesday RBA Governor Glen Stevens makes a speech on “Challenges for Economic Policy”.

The ASX/200 looks like starting the week in negative territory, very much caught in the draft of Global uncertainty. Technically, the inability of the market to close the week above 5000 offers little short-term hope of a significant recovery bounce.