Only one issue this week for markets to fret over, the US debt ceiling brawl which seems to be continuing towards a very large cliff with no real attempt to resolve it once and for all.
In fact a temporary fudge will probably result this week to postpone the much tougher decisions on future spending cuts and tax increases for months, perhaps more than a year.
The collapse on Friday night of the serious talks, and then fitful talks over the weekend leaves us no closer to resolution.
The debt ceiling brawl between President Obama and the Republicans is a proxy for the 2012 Presidential election campaign well ahead of time, so expect the negotiations to drag on as the battle of wills continues.
So, with the regular headaches of weak US growth (more news out this week), good news about earnings, especially from tech majors, concern about unemployment and Europe (the Greece deal late last week hasn’t resolved the problem once and for all), the markets remain wary, but prone to excitable rallies as we saw last week.
Friday saw some realism in US trading as the euphoria of Wednesday and Thursday (‘Debt deal done, Greece saved, again’) faded and smart investors realised the concerns hadn’t gone away at all.
Gold rose, oil traded slightly higher, trading volumes were weak in many markets (gold, oil and Wall Street) as the northern summer sent investors to the beach (a serious drought is expanding out of Texas and across the lower third of the US).
Spot gold closed at $US1602 an ounce, adding $US12 for the day, while West Texas Intermediate crude oil ended just under the $US100 a barrel mark.
In the US the Dow ended down 43.25 points, or 0.3%, to 12,681.16.
Component and equipment maker Caterpillar fell 5.8% on weak results from Japan, but McDonald’s shares rose 2.3% on the back of more eating by struggling consumers in the US and Europe.
For the week, the Dow gained 1.6%.
The S&P 500 Index gained 1.22 points, or 0.1%, to 1,345.02 on Friday. For the week it gained 2.2%.
Technology companies fared the best last week thanks to the strong report from Apple, Google the week before and other tech leaders.
The Nasdaq Composite Index added 24.4 points, or 0.9%, to 2,858.83. It gained 2.5% for the week and the Nasdaq 100 (a leaders index) hit a ten year high on Friday.
In Australia, the market will open a touch higher after the Share Price Index futures contracted added 3 points to 4590 early Saturday morning.
That was after the ASX200 index ended up 46.9 points, or 1%, on Friday at 4602.9, a gain of 2.9% for the week, the best weekly performance in eight months.
The All Ordinaries index gained 47.9 points for the day, or 1%, to 4674.1.
The Australian dollar ended the week at $US1.0851, up two cents from the week before, and all coming Thursday night and Friday in the wake of the Greek debt deal.
The Aussie hit a peak of $US1.060, the highest point for two months.
The currency gained nearly 2% over the week on the greenback.
Friday saw the banks back in favour as the Greek deal settled nerves for the time being.
The National Australia Bank rose 2.5% to $25.22, Macquarie Group rallied 3.3% to $30.06, coming off more than two-year lows hit the week before.
ANZ added 47c, or 2.2%, to $21.73, while Westpac was up 46c, or 2.2%, at $21.60.
The Commonwealth Bank rose 78c, or 1.6%, at $50.52, following the surprise announcement chief executive Ralph Norris will retire in November and be replaced by insider Ian Narev (a former consultant, not banker) as CEO.
BHP Billiton fell 15c to $43.42, while Rio Tinto added 11c to $82.45 after saying it was considering selling off one of its UK coal-fired power stations before the commencement of new environmental laws.
News Corp stocks were down again here on Friday, falling 25c, or almost 2%, at $15.23, while its non-voting stock dropped 17c, by more that 1%, to $14.73. News shares fell 0.7% in New York on Friday night to $US16.85.
BSky, the UK satellite Pay TV giant 39% owned by News Corp, reports quarterly earnings on Friday in London.
They will underline the damage to News Corp of the hacking scandal which forced News to abandon a bid for BSkyB at 7 pounds a share. The shares ended at 7.43 pounds on Friday night.
News Corp is due to release 4th quarter and 2010-11 full year results on August 4 in New York.
ConnectEast Group independent directors recommended a takeover proposal from Horizon Roads. That saw ConnectEast Group’s securities up 9c, or 20%, to 54 c.
The biggest loser was TV operator Austar, which slumped 16.2% to $1.085 after the ACCC raised concerns that a planned $2 billion takeover by bigger rival Foxtel, part-owned by Rupert Murdoch’s News Corp, would create a pay TV monopoly.
Austar reports its first half earnings later in the week.
Elsewhere in Asia, the MSCI Asia Pacific Index rose 2.5%, its biggest advance this month and the highest close since May 5.
Japan’s Nikkei and South Korea’s Kospi Index both increased 1.2% on Friday, Taiwan’s Taiex Index gained 0.6% and Hong Kong’s Hang Seng Index jumped 2.1%.
For the week the Nikkei was up 1.6%, (and within 1% or moving into a gain for the year), South Korea’s Kospi Index climbed 1.%, Australia’s ASX 200 Index ad
