CMC Markets Weekly Report

Stocks in the U.S. closed in negative territory on the final trading day of August, with the Dow and S&P 500 posting their worst monthly declines since May 2012, as investors held off making large bets ahead of a long holiday weekend amid escalating worries over Syria.

The Dow Jones Industrial Average slipped 30.64 points, to finish at 14,810.31. The S&P500 dipped 5.20 points, to end at 1,632.97 and the Nasdaq slumped 30.43 points, to close at 3,589.87.

President Barack Obama said that he has not made a final decision on a response to Syria's chemical weapons use, but that he is looking at limited action, not an open-ended commitment.

Obama's remarks follow a statement by Secretary of State John Kerry laying out the case for action against Syria.

Earlier, Secretary of State John Kerry said the U.S. has "high confidence" that the Syrian regime used chemical weapons in last week's attack that killed 1,429 Syrians, including 426 children.

Kerry also made a broad case for limited U.S. military action against Syria for its suspected use of chemical weapons, and also stressed anything that the U.S. might do would be carefully tailored. Equities initially sold off in a knee-jerk reaction, but quickly recovered from their lows.

On the economic front, consumer sentiment retreated to 82.1 in August from 85.1 in July, according to the Thomson Reuters/University of Michigan's final reading on the overall index. Still, the final result topped an initial mid-month reading of 80.0 and exceeded economists' expectations for a final read of 80.5.

Meanwhile, consumer spending ticked up 0.1 percent in July, according to the Commerce Department. Economists polled by Reuters had expected a gain of 0.3 percent.

And business activity in the Midwest rose to 53.0 in August from 52.3 in July, according to the Institute for Supply Management-Chicago. A Reuters survey of economists on average expected a median reading of 53.0 in August versus the July figure of 52.3.

In commodity markets, Gold slid below $US1,400 an ounce on Friday as the dollar rallied to a four-week high, spot gold eased 0.93 per cent to $US1,394.51 an ounce after slipping to a session low of $US1,392.06 an ounce. U.S. December gold futures lost $US18.10 an ounce to $US1,394.8 an ounce, down 1.28 per cent.

Brent crude oil fell in volatile trade on Friday ahead of a long holiday weekend in the United States, as the Obama administration made a case for a "limited" strike against Syria. Brent crude for October fell $US1.15 to settle at $US1,14.01 a barrel, after earlier reaching a low of $US1,13.63 prior to Kerry's speech. Brent gained 2.7 per cent over the past week. US crude for October delivery fell $US1.15 to settle at $US107.65 a barrel after hitting a session low of $US106.75. US crude finished the week up 1.2 per cent.

The Australian dollar is fetching 89.43 US cents, 88.02 yen, 67.66 euro cents, 57.58 pence

Locally, the Australian share market is expected to open weaker ahead of the federal election, amid the release of key economic data and ongoing uncertainty about Syria.

In economic news on Monday, the Reserve Bank of Australia (RBA) releases the index of commodity prices for month just ended, while the Australian Bureau of Statistics (ABS) releases the business indicators for June quarter and building approvals data for July.

The Australian Industry Group performance of manufacturing (PMI) index for month just ended is due out as is the TD Securities-Melbourne Institute inflation gauge for August, the Dun and Bradstreet business expectations survey and the RP Data Rismark Home Value Index for August.

Also expected is National Australia Bank's quarterly online retail sales index.

On Tuesday, the Reserve Bank's decision on interest rates is released. It is widely expected the official cash rate of 2.5 per cent will remain on hold. Also on Tuesday is Balance of Payments and retail sales numbers followed by Trade Balance on Thursday and AIG performance of Construction on Friday.

In the U.S., the markets are closed for Labor Day holiday today but on Tuesday investors can expect the PMI manufacturing index, ISM manufacturing index and construction spend.

On Wednesday it's the Fed's Beige Book, mortgage applications and international trade data. Thursday we can expect jobless claims and ISM non-manufacturing index followed by non farm payrolls on Friday.