CMC Markets Weekly Report

Stocks in the US closed near session highs Friday, as investors grew more optimistic over the progress in Washington. The Dow Jones Industrial Average soared 111.04 points, to close at 15,237.11. The S&P500 rallied 10.64 points, to finish at 1,703.20. And the Nasdaq jumped 31.13 points, to end at 3,791.87.

With a partial government shutdown in its 11th day, House Republicans were prepared to offer a new deal featuring both an increase in the debt limit and an end to the government shutdown in return for spending cuts.

The US borrowing limit is expected to arrive on October 17, risking a default if a deal to raise the limit is not reached.

On the economic front, consumer sentiment fell in October to its weakest level in nine months as the government shutdown affected Americans' outlook on the economy. The Thomson Reuters/University of Michigan's preliminary reading on the overall index on consumer sentiment fell to 75.2 in October, down from 77.5 in September. Economists surveyed by Reuters expected a reading of 76.0.

Producer price index, retail sales and business inventories have been postponed due to the ongoing government shutdown.

In commodity markets, World oil prices dipped despite hopes of a breakthrough in the crippling budget impasse in Washington. New York's main contract, West Texas Intermediate (WTI) for delivery in November dropped $US1.23 to $US101.78 a barrel. Brent North Sea crude for November slid 29 US cents to $US111.57 per barrel in early afternoon London deals.

Gold futures slumped to a three-month low as the belief that US political leaders would reach a compromise to raise the country's borrowing. The most actively traded contract, for December delivery, on Friday fell 2.2 per cent, or $US28.70, to settle at $US1,268.20 a troy ounce on the Comex division of the New York Mercantile Exchange, the lowest price since July 10th.

The Australian dollar is lower after talks to extend the US debt ceiling collapsed. At 0630 AEDT on Monday, the local unit was trading at 94.23 US cents, down from 94.76 cents on Friday.

In economic news on Monday, the Australian Bureau of Statistics (ABS) releases housing finance figures for August and in the US Columbus Day holidays are celebrated. Whilst markets are open, the banks are closed.