CMC Markets Weekly Report

Stocks in the U.S. came off their lows at the close on Friday, but still logged a weekly decline, with the S&P and Nasdaq snapping a 5-week winning streak, following stalled debt talks in Greece, some disappointing economic reports and after S&P downgraded a handful of Italian banks.

The Dow Jones Industrial Average slumped 89.23, or 0.69 percent, to close at 12,801.23. The S&P500 fell 9.31, or 0.69 percent, to end at 1,342.64 whilst the Nasdaq slipped 23.35, or 0.80 percent to close at 2,903.

Eurozone finance ministers said the debt-ridden nation will need to make further cuts in order to be granted bailout funds. Meanwhile, Greek workers went on strike, protesting against the austerity measures.

Meanwhile, Greece's Deputy Foreign Minister Marilisa Xenogiannakopoulou, a member of the socialist party, resigned in protest against the tough bailout terms, according to the state television.

In the latest round of disappointment from the euro zone, ratings agency S&P downgraded 34 of 37 Italian banks, including banking giant UniCredit, citing worries over the industry and economic risks in the country. The move comes after the ratings agency's downgrade of Italy's sovereign rating in January to BBB , along with downgrades of nine other euro zone countries.

Adding to woes, Chinese January trade data fell the most since the depths of the financial crisis, signalling further demand decline.

On the economic front, the trade deficit widened slightly more than expected to $48.8 billion in December, according to the Commerce Department, climbing to the highest level since July 2008. Economists polled by Reuters had expected the trade deficit at $48.0 billion.

And consumer sentiment index fell to 72.5, according to the Thomson Reuters/University of Michigan survey. Economists expected February's preliminary consumer sentiment index to dip to 74.5, according to a Reuters survey.

The US dollar index rose 0.7% as the euro fell and the Aussie dollar (risk indicator/carry trade) fell 1.2 cents to US$1.0664. Gold fell US$7.60 to US$1721.10/oz.

Base metals were slammed in London, with aluminium falling 1%, tin 2%, copper, lead and zinc 3% and nickel 4%. Brent crude fell US$1.38 to US$117.31/bbl and West Texas fell US$1.17 to US$98.67/bbl.

A busy week for data in the US begins on Tuesday with business inventories and retail sales, while Wednesday brings the Empire State manufacturing index, industrial production, housing market sentiment and the minutes of the Fed's last meeting. On Thursday it's housing starts, the Philly Fed manufacturing index and the PPI and Friday brings the CPI and a leading economic index.

This week will also see December quarter GDP assessments from Japan and the eurozone, and a busy week in Europe sees industrial production and the trade balance along with the influential German ZEW activity report.

In Australia, we'll have home loan and lending finance data out today. We should also have ANZ job ads given it's unemployment week. That will be followed by NAB's business confidence survey tomorrow along with the ABARES crop report. Wednesday it's Westpac's consumer confidence survey and vehicle sales and on Thursday we see the January employment numbers.

On the local stock front, the earning season kicks into gear. There are too many major reports out this week to list them all but suffice to say today kicks off with JB Hi-F i(JBH) and Leighton (LEI).

Perhaps worth mentioning specifically is the Commonwealth Bank (CBA) result on Wednesday. There is heightened speculation as to whether CBA and National (NAB) will match the other two big banks with small out of cycle interest rate rises. Commentary centres around the banks all moving outside of RBA movements.