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.
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.
Frequently Asked Questions about this Article…
The article describes mixed action: while there were tepid signs of a U.S. economic recovery, major indexes finished the week with late weakness. The Dow closed down 20.21 points at 11,103.12, the S&P 500 was down about 1% at 1,155.46, and the Nasdaq fell 1.1% to 2,479.35. Investors were reacting to economic data, earnings season beginning and ongoing European debt concerns.
Yes. The U.S. Labor Department reported non‑farm payrolls rose by 103,000 in September, above the Reuters consensus of 60,000, while the unemployment rate stayed at 9.1%. That stronger‑than‑expected jobs print was one of the data points moving markets and is a key figure investors watch for signs of U.S. growth.
Credit rating moves have heightened market concerns about the euro zone crisis. Fitch cut Spain’s rating to AA‑ from AA and downgraded Italy to A from AA‑; Moody’s also downgraded Italy earlier and cut 12 UK financial institutions. Those actions, together with political splits over use of the EFSF, have increased uncertainty for investors.
Key events highlighted include the EU summit on October 17 and the G20 meeting beginning November 3. In the U.S., investors should watch Alcoa’s earnings and the Fed’s minutes from its last policy meeting, plus upcoming trade balance and Treasury budget releases. These events could influence market direction and volatility.
The article notes the U.S. dollar index fell 0.2% to 78.74 while the Australian dollar rose to US$0.9781. Gold slipped about US$10.90 to US$1,637.50/oz. Tin and zinc rose ~2% in London, and Brent and WTI crude stood near US$105.88/bbl and US$82.87/bbl respectively. Currency and commodity moves can affect resource stocks, import/export dynamics and inflation expectations.
Australia’s week includes the ANZ job ads series, the NAB business confidence survey, housing finance and investment lending data, and the Westpac consumer confidence survey. The RBA rate outlook is described as uncertain, so economists will closely watch Australia’s employment report on Thursday. On the corporate side, Woolworths (WOW) will release a quarterly sales report on Tuesday and Bank of Queensland (BOQ) reports full‑year earnings on Thursday.
The article suggests it’s possible: ongoing euro zone stresses and political disagreements could keep markets distracted. However, if Europe’s policy direction is clarified or negative news is limited (with positive results expected from the EU summit and G20), Wall Street could focus on the September quarter earnings season starting Tuesday.
Yes. The U.S. bank holiday won’t close stocks or commodities but does close bond markets, which can produce thinner trading and increased price swings. Markets will also react to the Fed’s minutes—both items can contribute to short‑term volatility ahead of key economic releases and earnings.
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