The Monday Report

This story features NEWCREST MINING LIMITED, and other companies. For more info SHARE ANALYSIS: NCM

By Rudi Filapek-Vandyck

The Dow Jones might have posted its eigth consecutive week of ongoing gains, the broader S&P500 and Nasdaq indices recorded their first week of net losses on Friday (after seven weeks of gains) and this has attracted the attention of many a market commentator over the weekend. Time for a pull back? Time for a pause? How about that predicted correction?

Around half of US companies that make up the S&P500 index are scheduled to release quarterly results this week, so there will be plenty to get excited about, or not. Thus far company results have been rather mixed and so has been the response from traders and investors. On Friday Google shares turned direction and helped drag technology stocks down, but Dow component GE rallied in opposite direction.

Other events that are poised to keep markets enthralled are central bank meetings in the UK and the US with investors looking for any additional information on Quantitative Easing. Friday's release of the initial Q4 GDP estimate in the US will equally be a prime focus this week. According to a survey by Bloomberg, economists in the US are anticipating growth in the US economy has hit the accelerator, driven by the biggest gain in consumer spending in four years. Market consensus sits around 3.5% growth versus Q4 of 2009. Q3 saw a gain of 2.6%.

The big event in Australia will be the release of official consumer inflation data on Tuesday. The release will directly impact on interest rate projections, even though floods in Queensland and elsewhere in Australia are believed to keep the RBA at bay for months to come. Australian investors can expect a series of quarterly production reports from Monday onwards plus later in the week the first corporate results will hit the pc screens. On Wednesday financial markets will remain closed to celebrate Australia Day, which will make for a rather odd week.

Apparently, market consensus ahead of Tuesday's CPI release in Australia sits at a gain of 0.7% and this would likely not suffice to support further AUD gains. Economists at NAB have penciled in 0.8% but they readily acknowledge the risks are to the downside. ANZ is forecasting 0.8% too.

Australia Day celebrations on Wednesday concur with meetings by the FOMC and the Bank of England. Thursday and Friday in the US will bring us more insights on durable goods and pending home sales, followed by the above mentioned initial estimate of fourth quarter GDP growth. Friday also offers another read on US consumer sentiment.

Companies that are poised to attract attention In Australia this week include Newcrest ((NCM)), Riversdale ((RIV)) and Oil Search (OSH)), while the likes of GUD Holdings ((GUD)), ResMed ((RMD)) and Energy Resources of Australia ((ERA)) will provide warm-up releases for the February results season.

SPI futures in Australia are pointing towards small gains at the market's open today (approximately 10 points up).

As the USD faced further pressure on Friday, AUD was able to post small gains. However, the AUD continues to find it difficult to make significant headway versus the USD every time parity appears on investors's screens. No doubt this is keeping hedge funds on edge with the AUD widely seen as a benchmark for global risk appetite. On Monday, AUD/USD opens at .9890; AUD/EUR opens at .7269, AUD/GBP opens at .6188, AUD/NZD opens at 1.3043 and AUD/JPY opens at 81.77.

The euro hit a 2-month high against the USD on Friday, carried by the rise in the German IFO business sentiment. The pair opens at 1.3612 on Monday morning.

The WTI futures contract for February gained 0.3% to USD89.11 per barrel, but spot gold eased to a fresh two-month low despite a weaker US dollar, losing a further 0.3% to USD1343 per ounce.

Base metals were mixed on Friday night. Copper (+0.9%), aluminium (+0.5%) and nickel (+1.5%) gained on a weaker USD, greater confidence in the European economic outlook and as concerns about monetary policy in China waned. Lead and zinc meanwhile dropped (both -0.5%).

Agricultural commodities were broadly higher on Friday night. Wheat gained 2.6% to a 5.5 month high as weekly US wheat export sales were well above expectations. Corn (+0.5%) also gained on higher export figures and as the US government approved higher targets for use of corn to produce ethanol. Sugar experienced stronger gains (+3.3%). Palm oil (+0.4%) and canola oil (+0.3%) meanwhile had modest gains, while soybean futures eased slightly (-0.1%) as weather conditions in Argentina improved.

I will make my first appearance on business television for the new calendar year this week on Thursday, Sky Business, Lunch Money, 12-1pm. Today will also see the return of Weekly Insights (I intend to zoom in on the general feeling that a "correction" is imminent).

Greg Peel will return after Australia Day.

For further global economic release dates and local company events please refer to the FNArena Calendar.

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