CMC Markets Weekly Report

Markets in the U.S closed out a volatile week quietly on Friday, registering modest gains following a week of exuberance, a month of gains and three months of absolute turmoil.

By ·
31 Oct 2011

Markets in the U.S closed out a volatile week quietly on Friday, registering modest gains following a week of exuberance, a month of gains and three months of absolute turmoil.

The major averages closed slightly higher, with the Dow registering a 22 point, or 3.4 percent, gain that helped boost the market about 12 percent for October. The uneventful day came after a 3 percent rally Thursday sparked by an apparent deal regarding the European debt crisis.

On the economic front, the market was unimpressed with economic reports showing that personal income grew just 0.1 percent in September but consumers increased spending by 0.6 percent, a seemingly unsustainable trend that calls into question whether the 2.5 percent growth in the third quarter was an anomaly.

The final October reading for consumer sentiment on the other hand came in at a solid 60.9, well above expectations, though the market had little reaction.

Currency markets settled down on Friday, leading to a slight increase in the US dollar index to 75.05. The Aussie slipped 0.1% to US$1.0701 and gold is barely changed at US$1743.70/oz.

Base metals have been surging backwards and forwards en masse these past few sessions but even they had a quieter night on Friday, finishing mixed on small moves. Brent oil fell US$2.17 to US$109.91/bbl and West Texas lost US38c to US$93.32/bbl.

If we assume nothing new will come out of Europe until at least the end of the week, we can presume that US earnings and data and Australian data releases this week will provide with what we might call a “normal” period of trade.

There are an enormous amount of US earnings releases this week, but we're now through most of the large cap stocks.

In economic news, tonight sees the Chicago PMI, and then tomorrow it's manufacturing PMIs across the globe from Australia, China, the eurozone, UK and US. The US also sees vehicle sales and construction spending on Tuesday.

Wednesday brings the October private sector jobs report from ADP and, importantly, a Fed monetary policy meeting with scheduled press conference.

The US sees factory orders on Thursday along with chain store sales, and all of Australia, China and the UK will provide service sector PMIs, with the Europeans following up on Friday. Also on Friday it's the all important US non-farm payrolls report for October.

Today all of Australia will be watching just what sort of damage will be inflicted on Qantas (QAN) shares following the extraordinary events of the weekend. Investors will need to weigh up loss of income and loss of reputation against the “victory” won over the unions and implications for resolution of a dispute.

Today we also see the local construction PMI, the TD Securities inflation gauge, the RP Data-Rismark house price index and private sector credit. Tomorrow it's a quarterly house price measure, the manufacturing PMI and the RBA meeting. Victoria will be on holiday tomorrow for the Melbourne Cup and most of the rest of Australia will be out of action for the afternoon, except of course the interest rate trading desks.

Wednesday sees building approvals and new home sales and Thursday the services PMI along with both monthly and quarterly retail sales.

Today sees production reports from AWE (AWE), Aston (AZT), Murchison (MMX) and Minara (MRE). Westpac (WBC) will report its full-year result on Wednesday and ANZ (ANZ) will follow suit on Thursday. Woolworths (WOW) will hold a strategy day on Wednesday, and there is another big round of AGMs in store this week.

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