CMC Markets Weekly Report

Stocks in the U.S. closed modestly higher in a choppy session on Friday as investors snapped up beaten-down sectors following the previous session's steep sell off, however all indices were sharply lower for the week amid ongoing worries over a global slowdown.

The Dow Jones Industrial Average eked out a gain of 37.65 points, or 0.35 percent, to finish at 10,771.46. The S&P 500 gained 6.87 points, or 0.61 percent, to end at 1,136.43 and the Nasdaq climbed 27.56 points, or 1.12 percent, to close at 2,483.23.

Under pressure from investors to show action, finance ministers and central bankers from the G20 said they would take all steps needed to calm the stresses wracking the global financial system.

Commodities tumbled sharply with gold plummeting to $101.90, almost 10 percent, to settle at $1,639.80 an ounce, while silver plunged over 20% to log its biggest one-day decline ever, closing at $30.27.

Base metals also had another bad night on Friday as similar liquidation continued from the speculative side of the market. Copper fell another 4%, as did zinc, and lead fell 8%. Nickel, which had fallen 17% on Thursday, managed to bounce 7%. Brent crude fell US$1.52 to US$103.97/bbl and West Texas fell US66c to US$79.85/bbl.

Despite further falls in commodity prices the Aussie managed to recover a bit of ground, rising half a cent to US$0.9787 as the US dollar index fell 0.2% to 78.30. The US ten-year bond yield bounced back 9 basis points to 1.81%.

Meanwhile, citing a EU planning document, the EU is planning a Greek debt buyback program. According to the document, the operation would be open to all investors and include all of Greece's outstanding government bonds.

Earlier, Moody's downgraded the ratings of eight Greek banks by two notches citing a struggling domestic economy and declining deposits among reasons for the move.

This week should see a renewed focus on US economic data if volatility driven by Europe subsides somewhat. Tonight sees the Chicago Fed national activity index and new home sales, Tuesday night the Case-Shiller house price index, the Richmond Fed manufacturing index, and the Conference Board consumer confidence index. Wednesday it's durable goods and Thursday pending home sales, along with the second revision of the US June quarter GDP. Economists are expecting an improvement to 1.2% from the previous revision down to 1.0%. Friday brings the Michigan Uni consumer sentiment measure, the Chicago PMI and personal income and spending.

It's a quiet week for data in Australia, with new home sales on Wednesday and the RP Data-Rismark house price index on Friday along with private sector credit. Today brings another significant load of stocks going ex-dividend before the ex-divs start to peter out over the next couple of weeks. In their place will be a rising tide of Annual General Meetings.