CMC Markets Weekly Report

Friday the 13th turned out to be a lucky day for stocks, with the Dow and S&P 500 snapping a six-day losing streak, spurred on by sharp gains in financials following JPMorgan's earnings report.

Friday the 13th turned out to be a lucky day for stocks, with the Dow and S&P 500 snapping a six-day losing streak, spurred on by sharp gains in financials following JPMorgan's earnings report.

The Dow Jones Industrial Average finished up more than 200 points spurred on by JP Morgan who reported a US$5bn profit for the June quarter, down 8.7% from March but well above analyst expectations. The S&P 500 and the Nasdaq also closed near session highs finishing at 1356 up 1.7 percent and 2908 up 1.5 percent respectively.

On the economic front, the Thomson Reuters/University of Michigan July preliminary consumer sentiment index fell to 72, hitting its lowest level since December, after reaching 73.2 in the final June report.

Producer prices unexpectedly rose 0.1 percent in June despite big drops in energy prices, according to the Labour Department.

China's economy grew 7.6 percent in the second quarter, its slowest pace in three years. While in line with expectations, China's latest report marks the nation's sixth-straight quarter of slowing growth, with the economy headed for its softest full-year growth since 1999.

In Europe, Moody’s surprised markets by cutting Italy’s credit rating to two notches above junk status warning it could cut it further, adding pressure on the eurozone's third-largest economy.

All last week the US dollar index ticked higher in its safe haven role as earnings and data underwhelmed. On Friday it dropped 0.3 percent to 83.29 and allowed everything else to reverse as well. Most notably, the Aussie completely recovered the cent it lost post the local jobs numbers and it is now back at US$1.0239.

Commodities all bounced back on the dollar weakness, which saw base metals all up 1-2 percent, Brent up US$1.33 to US$102.40/bbl and West Texas up US$1.02 to US$87.10/oz. Gold was also stronger, jumping US$17.20 to US$1589.40/oz.

US earning seasons continues this week with an onslaught of reports from big names from the Dow components American Express, Bank of America, Intel, IBM, Microsoft, Travellers, Verizon and General Electric, and also results from Goldman Sachs, eBay and Yahoo.

It will also be a very big week for US economic data. Tonight we begin with retail sales, business inventories and the Empire State manufacturing index, and on Tuesday its CPI, industrial production and housing sentiment. Wednesday brings housing starts along with the Fed Beige Book of anecdotal economic performance, and on Thursday we'll wrap with the Conference Board leading index, existing home sales and the Philadelphia Fed manufacturing index.

In Europe tonight we'll see the eurozone's monthly trade balance, on Tuesday the ZEW survey of investor confidence, and on Wednesday construction output. Chinese property data is due on Wednesday.

It's a quieter economic week in Australia, beginning tomorrow with the release of the minutes of the last RBA meeting. The market was not surprised the central bank remained on hold this month but debate continues as to whether or not another cut can be expected shortly. We'll also see vehicle sales tomorrow, and on Wednesday it's Westpac's leading economic index. On Thursday NAB will summarise its business confidence surveys for the June quarter.

Data might be thin this week in Australia, but it’s a big week for resource sector June quarter production reports. Tomorrow we'll hear from Rio Tinto (RIO) and Fortescue Metals (FM)), on Wednesday it's BHP Billiton (BHP), and on Thursday it's Santos (STO) and PanAust (PNA).

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