CMC Markets Weekly Report

Stocks in the U.S ended sharply lower across the board Friday, logging their worst one-day drop in almost four months, pressured by disappointing quarterly results that highlighted the global economic slowdown.

The Dow Jones Industrial Average plunged more than 200 points, wiping out almost all of its gains for the week. The S&P500 and the Nasdaq also ended near session lows. Friday also marked the 25th anniversary of Black Monday, when the U.S. stock market went into a free fall and the Dow lost 22.6 percent in a single trading session.

On the economic front, existing home sales dipped in September to a seasonally adjusted annual rate of 4.75 million units, according to the National Association of Realtors.

European shares closed lower. German Chancellor Angela Merkel raised new hurdles to using the eurozone's bailout fund to inject capital directly into ailing banks from next year, dashing Spain's hopes of soon removing the cost from its national debt.

Spanish Prime Minister Mariano Rajoy, who received a eurozone pledge earlier this year of up to 100 billion euros to recapitalize the nation's banking sector, said he had still had not decided whether to request a sovereign bailout.

The Euro and commodity currencies eased modestly against the US dollar in trade on Friday. The Euro eased from highs near US$1.3075 to around US$1.3015 and closed US trade near US$1.3020. The Aussie dollar fell from highs near US103.65c to lows near US103.15c before ending US trade near US103.30c. And the Japanese yen held between 79.12 yen per US dollar and JPY79.40 and ended US trade near JPY79.28.

Benchmark crude oil prices fell in line with equities and other commodities on Friday. Brent crude fell by US$2.28 to US$110.14 and dropped over the week by US$4.48 or 3.9 percent. US Nymex crude fell by US$2.05 to US$90.05 and fell over the week by US$1.81 or 2.0 percent. Oil prices rose by around 2.2 percent the previous week.

Base metal prices fell in line with other commodities on Friday. Metals fell by 1.9-2.5 percent on the London Metals Exchange. Over the week metals fell by up to 2.7 percent (zinc) although tin fell by only 0.1 percent. The gold price also fell on Friday, with the December Comex gold futures down by US$20.70 to US$1,724.00 an ounce. Gold fell by 2.0 percent over the week. And the spot iron ore price fell by US20c on Friday to US$115.30 a tonne, but rose US80c over the week.

In economic news, The Reserve Bank of Australia (RBA) assistant governor, Guy Debelle is due to speak to the Australian Securitisation Forum 2012 in Sydney today. The Federal Government is set to release the mid-year budget review, whilst in the U.S, no major economic data is issued.