CMC Markets Weekly Report
Stocks in the U.S ended mixed in a quiet session Friday as investors were reluctant to jump in ahead of the weekend. Despite the lacklustre session, stocks still capped a strong finish for the shortened trading week, with all three major averages adding almost two percent, despite ongoing woes over the euro zone debt crisis and some disappointing corporate earnings results.
Stocks in the U.S ended mixed in a quiet session Friday as investors were reluctant to jump in ahead of the weekend. Despite the lacklustre session, stocks still capped a strong finish for the shortened trading week, with all three major averages adding almost two percent, despite ongoing woes over the euro zone debt crisis and some disappointing corporate earnings results.
The Dow Jones Industrial Average jumped 96.50 points, or 0.76 percent, to finish at 12,720.48, posting a four-day rally led by IBM ( 4.43%) and Microsoft ( 5.65%), which both beat expectations.
The S&P500 eked out a gain of 0.88 points, or 0.07 percent, to end at 1,315.38 whilst the Nasdaq slipped 1.63 points, or 0.06 percent, to close at 2,786.70.
Meanwhile, Google (-8.38%) plunged to lead the S&P laggards after the internet giant's results failed to reach Wall Street estimates.
Investors also kept a close watch on Greece as the debt-ridden continues to be in talks with private creditors over the details of a haircut on some of its bonds.
On the economic front, existing home sales rose 5 percent in December, according to the National Association of Realtors, hitting an 11-month high and logging its third-straight monthly increase.
For commodities markets, attention turned to HSBC's estimate of China's manufacturing PMI for January. While the result of 48.8 was above December's 48.7, the number still implies contraction. Traders are concerned China's economy will continue to slow in 2012. Base metals posted a mixed response, with copper down 1.7 percent, while Brent crude fell US$1.52 to US$109.88/bbl and West Texas fell US$2.19 to US$98.20/bbl. Oil traders are inclined to assume Iran's threats to block the Straits of Hormuz are hollow.
Gold finished up US$13.30 to US$1666.30/oz.
The US earnings season will be definitely gaining momentum this week as an array of companies report. On Wednesday the Fed will release its latest policy statement and hold the first of four press conferences for the year. President Obama will make a State of the Union address to the nation on Wednesday as well, all ahead of the first estimate of US December quarter GDP being released on Friday.
In between we'll see the Richmond Fed manufacturing index on Tuesday, pending home sales and the FHFA house price index on Wednesday, durable goods and new home sales on Thursday, and the final January consumer sentiment measure on Friday.
Its Chinese New year next week which shuts down mainland Chinese activity completely, including the stock market.
While it's a relatively quiet week for Australian data releases, the December quarter CPI on Wednesday will be vital to the RBA's decision whether or not to continue rate cuts into 2012. The RBA meets on February 7.
The PPI is out today, tomorrow brings the Conference Board leading index for November and Wednesday sees Westpac's equivalent calculation.
Australian markets will be closed for Australia Day on Thursday.
On the local stock front the resource sector will release quarterly production reports out this week. Highlights include Oil Search (OSH) and Newcrest (NCM), while on Friday ResMed (RMD) will post a quarterly earnings result.
Frequently Asked Questions about this Article…
U.S. stocks ended a quiet session mixed on Friday as investors stayed cautious ahead of the weekend, but still posted strong gains over the shortened week. The Dow jumped 96.50 points (0.76%) to 12,720.48, helped by rallies in IBM and Microsoft, the S&P 500 eked out a small gain to 1,315.38, and the Nasdaq slipped slightly to 2,786.70. Ongoing euro‑zone debt worries and some disappointing corporate results kept sentiment guarded.
IBM and Microsoft both beat Wall Street expectations for their results, which pushed their share prices higher and helped lead the Dow’s four‑day rally during the week.
Google fell sharply (about 8.38%) because its quarterly results failed to meet Wall Street estimates. For everyday investors, that’s a reminder that even large tech companies can see volatile moves when earnings miss expectations.
This week brings an accelerating U.S. earnings season plus key data: the Fed policy statement and the first of four Fed press conferences on Wednesday, President Obama’s State of the Union on Wednesday, and the first estimate of U.S. December‑quarter GDP on Friday. Other scheduled releases include the Richmond Fed manufacturing index (Tuesday), pending home sales and the FHFA house price index (Wednesday), durable goods and new home sales (Thursday), and the final January consumer sentiment reading (Friday).
HSBC’s estimate put China’s January manufacturing PMI at 48.8 (slightly up from December’s 48.7), but still below 50—indicating contraction—which fuels investor concern that China’s economy could slow in 2012. Also note mainland Chinese activity, including the stock market, shuts down completely for Chinese New Year next week.
Australian investors should watch the December quarter CPI (Wednesday), which is viewed as important to the RBA’s decision on whether to continue rate cuts (the RBA meets Feb 7). The PPI is released today, the Conference Board leading index is out tomorrow with Westpac’s equivalent on Wednesday, and markets are closed for Australia Day on Thursday. Local resource companies reporting quarterly production this week include Oil Search (OSH) and Newcrest (NCM), and ResMed (RMD) will post a quarterly earnings result on Friday.
Base metals were mixed (copper down about 1.7%), Brent crude fell about US$1.52 to US$109.88/bbl and West Texas fell about US$2.19 to US$98.20/bbl amid views that Iran’s threats to block the Straits of Hormuz may be hollow. Gold finished up roughly US$13.30 to US$1,666.30/oz. These moves matter because energy, metals and gold prices can influence inflation expectations, corporate costs and commodity‑exposed stocks.
Investors are closely watching Greece as it negotiates with private creditors over a possible haircut on some bonds. The uncertainty around those talks contributes to ongoing euro‑zone debt worries and can increase market volatility until there’s clarity.
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