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.

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