CMC Markets Weekly Report

Stocks in the U.S faded in the final hour of trading to close mixed Friday, with major indexes logging a second weekly decline, pressured by news of JPMorgan's trading loss and amid ongoing worries over the euro zone.

The Dow Jones Industrial Average slipped 34.44 points, or 0.27 percent, to close at 12,820.60. The S&P 500 erased 4.60 points, or 0.34 percent, to finish at 1,353.39 whilst the Nasdaq squeezed out a gain of 0.18 points, or 0.01 percent, to end at 2,933.82 points.

Stocks got a lift earlier in the session following a report that consumer sentiment rose to its highest level since 2008 in May.

But most of the day's focus was on JPMorgan after the banking giant disclosed that it suffered a trading loss of at least $2 billion from a failed hedging strategy. The firm estimates the business unit with the portfolio will post a loss of $800 million in the current quarter, excluding private equity results and litigation expenses. The bank previously forecast the unit would make a profit of about $200 million. Shares in JPMorgan fell 9% on the day and dragged on the entire banking sector.

In the latest news from Greece, socialist party leader Evangelos Venizelos failed to form a new coalition government after hosting last minute talks, crushing earlier hopes that the debt-ridden nation would avoid another round of elections next month.

Gold took another hit on Friday however, down US$13.00 to US$1580.40/oz, while base metals were mostly softer, with copper down 1.5%. Brent crude fell US47c to US$112.26/bbl and West Texas fell a heftier US$1.51 to US$95.57/bbl. The Aussie fell a further 0.7% and is now holding tentatively above parity at US$1.0024. The US dollar index is up slightly at 80.30, yet the US ten-year bond yield is now 4bps lower at 1.84%.

The eurozone will release its first estimate of March quarter GDP this week, on Tuesday, as well as industrial production, trade and inflation data and a business climate index over the course of the week. The ball is now firmly in Germany's court, and this week will be beholden to rhetoric from Berlin. There will nevertheless be a solid raft of economic data releases from across the globe.

The US will see retail sales, housing sentiment and the Empire State manufacturing index tomorrow, industrial production and housing starts on Wednesday, and the Philly Fed manufacturing index on Thursday. Tomorrow will also see the release of the minutes of the last Fed meeting, from which Wall Street will be looking for comforting signs QE3 is squarely on the table. It seems the only thing preventing a collapse of world stock markets at present is the anticipation of more monetary stimulus across the globe.

Australia will also be focused on policy easing as the RBA releases the minutes of its last meeting tomorrow. Today brings housing finance and investment lending and tomorrow sees vehicle sales. There's more lending data out on Wednesday along with the Westpac consumer confidence survey.

On the local stock front, today sees earnings results from Dulux (DLX) and Incitec Pivot (IPL), on Wednesday its CSR (CSR), and on Thursday Commonwealth Bank (CBA) will provide a quarterly update.