CMC Markets Weekly Report
Stocks in the U.S erased most of their earlier gains to finish near the flatline in thin trading Friday, as investors booked profits ahead of the weekend following a robust rally all week. All three majors posted an impressive 7 percent gain for the week.
Stocks in the U.S erased most of their earlier gains to finish near the flatline in thin trading Friday, as investors booked profits ahead of the weekend following a robust rally all week. All three majors posted an impressive 7 percent gain for the week.
The Dow Jones Industrial Average finished slightly lower to close at 12,019.42, but still logged its second best weekly point gain ever and ended in positive territory for 2011. The S&P500 and the NASDAQ ended narrowly mixed, closing at 1,244.28 and 2,626.93 respectively.
Non-farm payrolls increased 120,000 last month according to the Labour Department, while the jobless rate declined to a 2-1/2 year low of 8.6 percent. Economists had expected a gain of 122,000.
Currency traders appeared also to be squaring up, with the US dollar index rising by 0.4% to 78.63. The Aussie was off slightly to US$1.0213 and gold was barely changed at US$1745.70/oz.
Base metals were mostly underwhelming with the exception of nickel. A drop in inventories was enough to trigger technical buying and nickel jumped 5%. Brent crude rose US90c to US$109.94/bbl and West Texas gained US93c to US$101.13/bbl.
Earlier, stocks got a boost following a report that the ECB may be gearing up to lend as much as 200 billion euros to the IMF to ease the sovereign debt crisis, according to Bloomberg.
Investors will be focusing on the European summit in Brussels at the end of the week as the euro zone leaders will yet again be expected to discuss changes to the EU treaty to better enforce fiscal discipline.
German Chancellor Angela Merkel said in a speech to German members of parliament that it was pointless to even consider Eurobonds. Merkel said there was no single quick fix and no fast and easy solution to the euro zone debt crisis, and called for a fiscal union and tighter controls.
French President Nicolas Sarkozy said he would support more severe sanctions for budget sinners in Europe.
On the economic front, following on from the global round of manufacturing PMIs last week will be the November service sector PMIs, with all of Australia, China, the eurozone, UK and US reporting over the next 24 hours.
For the US it then becomes a quieter data week featuring factory orders tonight, wholesale trade on Thursday and the trade balance on Friday, along with fortnightly consumer sentiment.
There'll be industrial production numbers and trade balance data from Europe and the UK this week, as well as another revision of the eurozone September GDP on Tuesday. This will lead us up to rate decision from both the ECB and Bank of England on Thursday. The ECB is expected to cut.
Locally, a rate cut by the RBA is looking more likely given the announcement of coordinated currency swap measures by the major central banks last week. The move was a response to the deteriorating situation in Europe, and the RBA has signalled that Europe will also dominate Australian policy at this stage.
It's a big week for economic data in Australia given the release of the September GDP result on Wednesday. After a difficult third quarter from a sentiment point of view, economists are expecting a result of 1.0 percent growth (qoq) down from 1.2 percent in June.
Today it's company profits and inventories, ANZ job ads and the TD Securities monthly inflation gauge (along with services PMI), and tomorrow it's net exports, the current account and ABARES quarterly crop forecast, whilst Wednesday brings the construction PMI.
If that's not enough, the unemployment numbers are out on Thursday and following on from Tuesday's rate decision, the RBA governor will make a speech.
Then to wrap the week ahead of the EU summit we'll have the monthly data dump from China, featuring inflation, industrial production and retail sales data.
Frequently Asked Questions about this Article…
US stocks ended the week near the flatline after erasing earlier gains in thin Friday trading, though all three major indexes posted about a 7% gain for the week. The Dow closed slightly lower at 12,019.42 while the S&P500 and NASDAQ finished at 1,244.28 and 2,626.93 respectively. For everyday investors, a strong weekly rally followed by profit-taking suggests continued volatility—watch key economic data and central bank signals that could influence near-term market direction.
The US added 120,000 non‑farm payrolls last month and the jobless rate fell to 8.6%, a 2½‑year low—slightly below economist expectations of a 122,000 gain. These employment figures matter because they influence Fed policy expectations, market sentiment and consumer spending forecasts; small misses or beats can move bond yields, currencies and equities.
The US dollar index rose about 0.4% to 78.63. The Australian dollar was slightly weaker at US$1.0213. In commodities, gold was nearly unchanged at US$1,745.70/oz, nickel jumped 5% after inventory drops triggered technical buying, Brent crude rose to about US$109.94/barrel and West Texas Intermediate reached roughly US$101.13/barrel. These moves reflect a mix of risk sentiment, inventory dynamics and macro news.
Investors are focused on the upcoming European summit in Brussels where eurozone leaders are expected to discuss treaty changes to enforce fiscal discipline. Bloomberg reported the ECB may lend as much as €200 billion to the IMF, and political leaders like Angela Merkel rejected eurobonds while urging fiscal union, with Nicolas Sarkozy backing tougher sanctions for budget offenders. Outcomes from the summit could affect sovereign debt risk, euro strength and global market confidence.
The ECB and Bank of England both have rate decisions this week, and the ECB is expected to cut. In Australia, a rate cut by the RBA looks more likely given recent coordinated central bank currency swap measures and Europe's deteriorating situation. These central bank decisions are key for bond yields, currency moves and equity sector performance.
Australia has a heavy data calendar: September GDP is due Wednesday with economists expecting 1.0% quarter‑on‑quarter growth (down from 1.2%), plus company profits and inventories, ANZ job ads, TD Securities' inflation gauge and services PMI, net exports, the current account, the ABARES quarterly crop forecast, construction PMI, and Thursday’s unemployment numbers. The RBA governor will speak after Tuesday’s rate decision—these releases will influence Australian market and policy expectations.
Following global manufacturing PMIs, the November services PMIs for Australia, China, the eurozone, the UK and the US are being released; China will also publish monthly inflation, industrial production and retail sales. These data points give investors fresh insight into global growth momentum and can move risk assets, commodities and currency pairs depending on whether readings beat or miss expectations.
Keep an eye on the major economic calendar items highlighted this week: US factory orders, wholesale trade and the trade balance; ECB and BoE rate decisions; Australia’s GDP, unemployment and RBA commentary; and China’s monthly data. Also watch developments from the EU summit and any central bank liquidity measures. Monitoring these events can help you understand drivers of short‑term volatility without making knee‑jerk portfolio decisions.
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