CMC Markets Weekly Report

Stocks in the U.S ended narrowly mixed in lacklustre trading on the final day of November, as investors were reluctant to make big bets ahead of the weekend amid ongoing “fiscal cliff” discussions.

Stocks have been choppy in the recent weeks as investors reacted to a chain of mixed remarks from lawmakers in Washington on the progress of the fiscal cliff talks.

The Dow Jones Industrial Average eked out a gain of 3.76 points to close at 13,025.04 in volatile trading. The S&P500 squeezed out a gain of 0.23 points to end at 1,416.25, while the Nasdaq slipped 1.79 points, to finish at 3,010.24.

President Obama travelled to a factory in Pennsylvania to press his case on raising taxes on the wealthy to narrow the deficit. The president is still negotiating with the Republicans on how to avoid the steep automatic tax increases and spending cuts that will kick in soon without a deal.

Meanwhile, Speaker John Boehner said at a press conference that the 0 Republicans are “right now, almost nowhere” in regards to the fiscal cliff talks with the White House.

On the economic front, consumer spending slipped in October, falling for the first time in five months, according to the Commerce Department. The decline suggested slower economic growth for the fourth quarter. Economists polled by Reuters expected spending to be flat last month.

Meanwhile, business activity in the Midwest expanded for the first time since August, with the Institute for Supply Management-Chicago business barometer gaining to 50.4 in November. A reading above 50 indicates expansion in the regional economy.

European shares ended near a 17-month high after Germany's parliament approved new aid measures for Greece, including the reduction of interest Greece pays on loans and the release of bailout funds.

Major currencies drifted higher against the US dollar in European and US trade on Friday. The Euro held between US$1.2970 and US$1.3025, and was around US$1.2980 at the US close. The Aussie dollar had little change and was near US104.25c at the US close.

World crude oil prices rose in choppy trade on Friday. Brent crude rose by US47c or 0.4 percent to US$111.23 and US Nymex crude rose by US84c or 1.0 percent to US$88.91 a barrel.

Base metal prices posted solid gains of up to 3.8 percent (nickel) on the London Metals Exchange on Friday the exception was tin, down 0.1percent. Over the week, base metal prices rose strongly, lifting between 2.8-6.3 percent. Aluminium and nickel outperformed while copper and lead underperformed. The gold price eased on end month profit-taking with the December Comex gold futures lower by US$16.30 an ounce to US$1,710.90. The new benchmark February contract fell US$16.80 to US$1712.70. Over the week gold lost US$40.50 or 2.3 percent. And the spot iron ore price fell by $1.30 to US$115.60 a tonne and lost $3.30 a week.

In the week ahead it is a very busy week on the Australian economic front. The last of the September quarter data ahead of Wednesday's GDP result will be released including company profits and inventories today and net exports and the current account tomorrow. The RBA has to make a rate decision tomorrow before the GDP release. Consensus has Australian GDP growth at 0.6 percent, matching the June quarter, for 3.1 percent annualised growth, down from 3.7percent.

There is a raft of local monthly data out this week as well, on top of the three PMIs. Today sees retail sales, ANZ job ads, the TD Securities inflation gauge and the Rismark RP-Data house price index, tomorrow brings building approvals, Thursday the unemployment numbers and Friday the trade balance.