CMC Markets Weekly Report

Stocks in the U.S. rallied to close near session highs on Friday after Bernanke reiterated that there is further room for the central bank to act and following reports the ECB is considering setting yield band targets in a new bond-buying program.

Stocks in the U.S. rallied to close near session highs on Friday after Bernanke reiterated that there is further room for the central bank to act and following reports the ECB is considering setting yield band targets in a new bond-buying program.

The Dow Jones Industrial Average rallied 100.51 points, or 0.77 percent, to close at 13,157.97. The S&P500 rose 9.05 points, or 0.65 percent, to end at 1,411.13 whilst the Nasdaq gained 16.39 points, or 0.54 percent, to finish at 3,069.79.

Shortly after a weak open, the market popped as traders reacted to a letter from Bernanke, obtained by the Wall Street Journal, who said there is "scope for further action" by the Fed to ease financial conditions and support the economy.

The Chairman's comments echoed remarks from the Fed's latest meeting minutes from earlier this week.

Growing doubts over whether the Fed will introduce further stimulus measures put a damper on equities in the previous session. Around the same time, equities were also boosted after a report ECB is considering setting yield band targets under a new bond buying program that could help contain borrowing costs for Greece, Spain and other eurozone countries.

Stocks initially opened lower amid jitters over Greece's future in the eurozone. German Chancellor Angela Merkel said the debt-ridden nation must stick to its commitments to stay in the euro area, and did not commit to granting more time for Greece to complete the required reforms to receive bailout loans.

On the economic front, durable goods orders jumped in July, thanks to robust aircraft demand, according to the Commerce Department.

Base metals were a little stronger in London on the US data and despite the weaker dollar. Gold was steady nevertheless at US$1670.50/oz and the Aussie has slipped 0.3 percent to US$1.0407.

The US dollar's rise did send oil, which has been running to the upside of late, lower, with Brent down US$1.42 to US$113.59/bbl and West Texas down US12c to US$96.15/bbl despite the build up of Tropical Storm Issac in the Caribbean.

On the local economic front, the countdown to next week's June quarter GDP result is now on in earnest with quarterly construction work done due on Wednesday and private sector capex on Thursday, the latter being of particular interest to the RBA. We'll also see monthly new home sales on Tuesday, building approvals on Thursday and private sector credit on Friday.

The US will see the first revision of its June quarter GDP estimate on Wednesday and economists are expecting a lift to 1.7% from the initial 1.5%. Monthly pending home sales are out tonight, the Case-Shiller house price index, Richmond Fed index, and consumer confidence on Tuesday, personal income and spending and chain store sales on Thursday and factory orders on Friday. On Wednesday the Fed will release its Beige Book anecdotal assessment of activity in each Fed region, and on Thursday, as we know, all cameras and microphones will be trained on Wyoming.

UK markets are closed tonight for a holiday, so no base metals.

Friday marks the end of August and thus the last week of the local results season. The week will be topped and tailed by retail with Billabong (BBG) reporting today and Harvey Norman (HVN) on Friday, while Worley Parsons (WOR), Transfield (TSE), Perpetual (PPT), Lend Lease (LLC) and Paladin Energy (PDN) providing highlights.

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