CMC Markets Weekly Report

Stocks in the U.S rallied in the final hour of trading on Friday to close in positive territory, amid optimism the euro zone would find a solution to its debt crisis.

The Dow Jones Industrial Average rallied 166.36 points, or 1.45 percent, to finish at 11,644.49, whilst the S&P500 jumped 20.92 points, or 1.74 percent, to close at 1,224.58, and the Nasdaq jumped 47.61 points, or 1.82 percent, to end at 2,667.85.

Contributing to the rally were comments from Treasury Secretary Timothy Geithner, who said the IMF already has a good supply of uncommitted resources that can be used to help in the battle to stem Europe's debt crisis.

Meanwhile, Standard and Poor's cut Spain's credit rating, citing the challenges facing Europe's finance ministers as they prepare to meet counterparts from the Group of G20 nations over the euro zone debt crisis. The market seemed to shrug off the credit rating agency's latest move.

Oil stocks were prevalent amongst the leaders on Friday as oil prices surged on the Chinese inflation and US retail sales news. Brent rose US$3.57 to US$114.68/bbl and West Texas jumped US$3.05 to US$87.28/bbl.

Base metals also took heart in London, and copper led the way with a 3% gain. Commodity prices were assisted by the ongoing slide in the US dollar. The index fell 0.4% to 76.61 despite the euro being slightly weaker on the Spanish downgrade news, while the Aussie can't believe what it was doing below parity last month and was up over a cent again to US$1.0332.

Gold continued its range-trading in rising US$12.50 to US$1679.80/oz while the US ten-year bond yield added another 6bps to 2.23%.

Meanwhile, consumer sentiment unexpectedly dipped in early October, falling to 57.5 from 59.4 in the final September report, according to the Thomson Reuters/University of Michigan survey. Economists expected the reading to rise to 60.2.

U.S. import prices unexpectedly gained 0.3 percent in September, logging their largest increase in five months amid higher fuel and food costs, according to the Labor Department. Economists polled by Reuters had expected prices to decline 0.3 percent last month.

It will be a very big week for the US economy in terms of both data and corporate earnings.

US earnings highlights this week will include Apple, Yahoo, Freeport-McMoran, Goldman Sachs and Morgan Stanley, and Dow components Bank of America, Coca-Cola, Intel, Johnson & Johnson, American Express, Travelers, United Technologies, AT&T, Microsoft, General Electric, McDonalds and Verizon.

On the US economic front, tonight sees industrial production and the Empire State manufacturing index, and Tuesday the housing sentiment index and the PPI. Wednesday it's the CPI, housing starts, and the Fed's Beige Book, and Thursday sees the leading economic index, existing home sales and the Philadelphia manufacturing index.

It's a little quieter economically in Australia, with vehicle sales kicking off the week today. We'll see Westpac's measure of inflation expectations on Wednesday, NAB's summarised business confidence report for the September quarter on Thursday, and import/export prices on Friday. The RBA will release the minutes of its October meeting on Thursday.

On the local stock front, BHP Billiton (BHP) and OZ Minerals (OZL) will report September quarter production on Wednesday, Newcrest (NCM) and Santos (STO) will follow suit on Thursday and Woodside (WPL) on Friday. Wesfarmers (WES) will report quarterly retail sales on Thursday and Ten Network (TEN) will release its full-year result on Friday.

China will report its September quarter GDP on Tuesday and expectations are for growth of 9.3%, down from 9.5% in June. Monthly industrial production and retail sales data will also be released.