CMC Markets Weekly Report

US Stocks ended higher at the close of trade on Friday, although lower for the week, amid concerns over global growth and Middle East unrest, and in the wake of a devastating earthquake in Japan. The Dow Jones Industrial Average gained 59.79 points, or 0.50%, to close at 12,044.40 on Friday. For the week, the blue chip index fell 1.03%.

That softness is expected continue until the Federal Open Market Committee's announcement next Tuesday, where traders will look for a sense of the Fed's current thinking on its $600b bond buying program known as “quantitative easing 2”.

The U.S. equity markets had a muted reaction to the Japanese earthquake on fairly light volume, as equity markets treaded water throughout most of the session. The earthquake triggered a tsunami that swept across the northern coast of Japan and hit the coast of Hawaii and Northern California.

The news rattled stocks, currencies, and oil at the start of the session. Most Japanese ADRs traded lower, while the yen first fell sharply lower, then rose as traders remembered how strongly the yen performed after a quake in 1995.

Oil slid 1.5% as refineries were shut in Japan, cutting demand in the third-largest oil-consuming nation.

Other commodity markets were undecided on Friday night, with copper ticking up slightly but all other metals closing weaker. Gold was little moved, up US$4.50 to US$1416.80/oz, but silver took off again with a 2% jump to US$35.91/oz. The Aussie gained one and a half cents on the US dollar drop to US$1.0150.

Investors also focused on news of increased inflation in China, although the 4.9% rise was less than some had feared.

This week will traders will remain focused on events in the Middle East, and its implications for oil prices, as well as the news flow out of Japan.

The US economic week begins on Tuesday with the Empire State manufacturing index, the NAHB housing market sentiment index, and the results of the Fed monetary policy meeting. Wednesday is housing starts and the producer price index and on Thursday industrial production, the Philly Fed manufacturing index, and the consumer price index.

Tomorrow in Australia sees the release of the minutes of the March RBA meeting, vehicle sales and lending finance, and Wednesday is fourth quarter dwelling starts and the Westpac leading economic index. Thursday brings the RBA's monthly bulletin.