CMC Markets Weekly Report

Despite a failed attempt at the end of Friday's session to close the session out on a positive note, stocks in the U.S finished higher for the week on some tepid signs of recovery for the US economy.

The Dow was modestly lower, closing down 20.21 points at 11,103.12, but the S&P500 posted losses approaching 1 percent finishing the week at 1155.46, while the late-day sell-off pushed the Nasdaq tech gauge down 27.47, or 1.1 percent, to 2479.35.

Fitch slashed Spain's rating to AA- from AA , citing risks of slow growth and high regional debt, and Italy's to A from AA-, adding the outlook on its long-term ratings is negative.

Italy's downgrade follows an earlier cut this week by Moody's. Moody's also downgraded 12 UK financial institutions, saying it sees a decreased likelihood of government support for smaller institutions in particular, but specifying the move does not reflect a deterioration in the financial strength of the banking system.

Meanwhile, German Chancellor Angela Merkel and French President Nicolas Sarkozy were split ahead of crucial summit talks over the weekend over the usage of the EFSF.

On the economic front, the monthly non-farm payrolls number grew more than expected in September, jumping 103,000 in September, but the unemployment rate remained steady at 9.1 percent, according to the US Labor Department. Economists polled by Reuters expected a total of 60,000 jobs to have been created.

Concerns over the euro zone crisis have hit the market hard in recent months, along with fears about the slowing economic growth in the U.S. and China.

The US dollar index fell 0.2% to 78.74 and the Aussie rose 0.2% to US$0.9781. Gold slipped back US$10.90 to US$1637.50/oz. Tin and zinc were up 2% in London but other moves were mixed and sub 1%. Brent oil rose US15c to US$105.88/bbl and West Texas was up US28c to US$82.87/bbl.

As we enter this week, global markets will be looking for a bit more stability and perhaps a little less volatility as we now await ratification of Europe's new policy direction. Barring negative news flow, positive results are expected from the EU summit scheduled for October 17 and/or the G20 meeting beginning on November 3.

If the European influence can remain on hold until such time, Wall Street can turn its focus squarely towards the September quarter corporate earnings season beginning on Tuesday.

Whilst Monday's US bank holiday does not close the stock or commodity markets, it does close bond markets and can lead to thin trading. Aside from Alcoa's earnings result on Tuesday, the Fed will release the minutes of its last policy meeting.

The US trade balance and Treasury budget will be released on Thursday ahead of retails sales and fortnightly consumer sentiment on Friday.

Trade balance data will also be forthcoming from Germany tonight, Japan on Tuesday, the UK and China on Thursday and the eurozone on Friday. It appears China has now moved away from what was once its monthly “data dump”, preferring to spread its releases around a little more. Thus Friday is scheduled to see Chinese inflation data.

Australia's economic week kicks off with the ANZ job ads series today, followed by the NAB business confidence survey tomorrow. On Wednesday its housing finance and investment lending, along with the Westpac consumer confidence survey.

With RBA rate policy now supposedly hanging in the balance, economists will be closely watching Australia's employment report on Thursday.

Australia's Annual General Meeting season kicks off this week with the first of the September quarter production reports from the resources sector. Woolworths (WOW) will provide a quarterly sales report on Tuesday and Bank of Queensland (BOQ) delivers its full-year earnings on Thursday.