CMC Markets Weekly Report

Stocks in the U.S finished near session highs Friday, recovering from a two-day slump, lifted by upbeat economic data from Europe and after comments from St. Louis Fed President James Bullard, that the central bank's aggressive easy money policy will stay for a "long time."

Stocks in the U.S finished near session highs Friday, recovering from a two-day slump, lifted by upbeat economic data from Europe and after comments from St. Louis Fed President James Bullard, that the central bank's aggressive easy money policy will stay for a "long time."

The Dow Jones Industrial Average rallied 119.95 points, or 0.86 percent, to finish at 14,000.57. The S&P500 jumped 13.18 points, or 0.88 percent, to close at 1,515.60. And the Nasdaq advanced 30.33 points, or 0.97 percent, to end at 3,161.82.

Meanwhile, traders said leaked reports that Fed Chairman Ben Bernanke has been downplaying worries that quantitative easing has spawned asset bubbles also helped lift markets.

Bernanke is scheduled to speak before lawmakers on Tuesday and Wednesday. Earlier, St. Louis Federal Reserve President James Bullard said the Fed remained committed to aggressive easing measures in the form of its $85 billion a month bond-buying program. Uncertainty about the future of the central bank's bond buying program weighed on the stock market in the last two days.

Minutes from the Fed's meeting in January, released on Wednesday, showed policymakers were growing concerned about the impact of quantitative easing, suggesting the central bank may taper off its $85 billion per month purchases earlier than expected.

European shares ended broadly higher following positive economic news from Germany and ahead of Italy�s general election this weekend.

German business sentiment jumped at its fastest rate since July 2010 in February, suggesting the country is rebounding after its weak fourth quarter.

U.S. President Barack Obama will meet with Japanese Prime Minister Shinzo Abe in Washington. Abe is expected to seek support for the hyper-easy monetary policies he has instigated to revive Japan's ailing economy.

The Aussie dollar is steady at US$1.0304 whilst other the major currencies traded sideways against the U.S. dollar in European and U.S. trade on Friday. The Euro held between US$1.3150 and US$1.3240 and was near US$1.3190 at the U.S. close.

In commodity markets, world crude oil prices rose modestly on Friday. Brent crude rose by US57c to US$114.10 and the U.S. Nymex crude price rose by US29c to US$93.13 a barrel.

Base metal prices were generally lower on the London Metals Exchange on Friday. Aluminium fell most, down by 1.5 percent, while nickel rose by 2.1 percent. The price of gold continues to fall, touching seven-month lows on Friday. The Comex April gold futures price fell by US$5.80 an ounce or 0.4 percent to US$1,572.80 per ounce.

Locally this week, earnings season continues with QBE, Whitehaven, Virgin, Flight Centre, Harvey Norman and Woolworths scheduled to report earnings. On Thursday, the ABS will release figures for private new capital expenditure and expected expenditure for the December quarter. Analysts are expecting a 1.5 per cent rise for the quarter. The result will be watched closely by the RBA which meets next week to decide on official interest rates.

Friday we can expect the AIG PMI index for February and HIA trades report for the December quarter.

Whilst it�s a relatively quiet week on the economic front locally, we can expect a full calendar for the U.S.

Kicking off with the national activity index and Dallas Federal Reserve manufacturing index released today. Tuesday we can expect FHFA housing price index, S&P case-Schiller home price index, new home sales, Richmond manufacturing index. Wednesday we have the weekly mortgage applications, durable goods order, pending home sales and oil inventories. Thursday we�ll see GDP, jobless claims, Chicago PMI and natural gas inventories. Friday rounds off the week with personal income and outlays, PMI manufacturing index, consumer sentiment, ISM manufacturing index, construction spending and auto sales.

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