Morning traders. Good to be back. Many thanks to Suzie for launching these threads over the last two weeks - great effort and very much appreciated.
Market wrap: Australian stocks are likely to open near a six-week high after US stocks ended their best week in three years with robust gains on Friday.
The December SPI futures contract closed 46 points or 1.1% stronger at 4266 on Saturday morning as US retail sales jumped and corporate earnings beat expectations.
The S&P 500 rallied 1.74% on Friday for a weekly gain of 6% amid optimism that European leaders are closer to a workable plan for managing the region's debt problems. The Dow added 166 points or 1.45% for a third straight weekly advance. The Nasdaq put on 1.82%.
"The systemic fear is definitely subsiding," the chief investment officer at First Trust Portfolios in the US told Bloomberg. "We've got earnings coming in better than expected, and valuations are quite low on a price-to-earnings basis, so there really isn't a lot of downside risk to the market."
Investor focus in the US on Friday swung back towards domestic concerns, where Google topped analyst earnings projections and retail sales delivered their biggest rise in seven months. Retail sales improved by a seasonally adjusted 1.1% in September, overshadowing a drop in consumer sentiment over the same period.
Volume was relatively light ahead of a weekend G20 meeting where the world's leading developed nations backed Europe's increased bailout fund and urged European leaders to back a revised plan to cauterise its debt crisis at a summit on October 23. Euro-zone leaders are working on a plan that is said to include a write-down of Greek bonds, support for the region's banks and leveraging the increased European Financial Stability Facility.
Energy stocks led sector gains in the S&P 500 as oil hit a three-week high. Crude for November delivery surged $3.05 or 3.6% to end the week at US$87.28 a barrel. The weekly gain was at least 4.6% amid enthusiasm for an improvement in global demand if Europe's problems are contained.
Copper hit its highest level in two weeks as a dip in Chinese inflation reduced the risk of further cooling measures in the world's biggest consumer of raw materials. In London, copper rallied 3.4%, aluminium 0.7%, nickel 2.2% and zinc 0.3%. Tin eased 0.3% and lead 0.7%. US copper surged 3.9%.
Gold rallied as volatility continued to subside following last month's precipitous plunge from record levels. Gold for December delivery improved by $13.30 or 0.8% to US$1,681 an ounce. December silver put on 50 cents or 1.6% at US$32.17 an ounce.
Gains in mining stocks helped the major European markets overcome falls among banks following broker downgrades. Britain's FTSE added 1.17%, Germany's DAX 0.89% and France's CAC 0.97%.
TRADING THEMES THIS WEEK
REACTION TO THE WEEKEND G20 MEETING: European leaders spent the weekend talking up a plan to contain the region's debt crisis. G20 officials appeared to like it. Further market gains ahead this week?
US QUARTERLY CORPORATE EARNINGS: The earnings season is off to a promising start. With p/e ratios at relatively low levels, there's room for rallies if this week's crop of reports are as strong.
CHINESE GDP: Due tomorrow at noon AEST. Expectations are for a further evidence of cooling in the Chinese economy from growth of 9.5% last quarter to around 9.2%.
ECONOMIC NEWS: This week's domestic schedule includes: motor vehicle sales (10.30 am today); minutes from the last Reserve Bank meeting (tomorrow); leading index (Wed); business confidence (Thu); and import prices (Fri). A busy week ahead in the US includes: the Empire state index, industrial production (tonight); producer price index, core PPI, home builders' index (tomorrow); consumer price index, core CPI, housing starts (Wed); weekly jobless claims (Thu); and existing home sales, leading indicators and Philly Fed (Fri).
