·         US stocks fell on Friday night (DOW down 74 points),  as weaker than expected GDP figures, overshadowed strong consumer sentiment numbers.

Economic Growth

·         The government last week reported the economy grew at a 2.8 percent annual pace in the fourth quarter after a 1.8 percent gain in the prior three months. The growth rate excluding a jump in inventories was 0.8 percent, the report showed.

·         Consumer spending rose at a 2 percent pace last quarter, less than the median forecast of economists surveyed. Household purchases climbed 2.2 percent in 2011 after an increase of 2 percent in 2010, the weakest two-year performance of any expansion since the end of World War II.

·         A report from the Institute for Supply Management on Feb. 1 will show its factory index rose to 54.5 this month, the highest since June, from 53.9 in December. Two days later, a report from the Commerce Department may show factory orders increased 1.5 percent in December after a 1.8 percent gain the prior month, according to the estimates of economists surveyed.

Service Industries

·         Another survey from the Tempe, Arizona-based ISM on Feb. 3 may show a gauge of non-manufacturing companies, which make up almost 90 percent of the economy, rose to 53.2 this month, the highest since August, from 52.6 in December, according to economists' estimates. For both the ISM gauges, measures greater than 50 signal growth.

·         Consumer confidence has also picked up. The Conference Board (CONCCONF)'s sentiment index rose to 68 in January from 64.5 the prior month, according to economists' estimates before the Jan. 31 report. That would be the highest level since February.

·         Consumer purchases rose 0.1 percent in December for a third consecutive month, economists estimated the Commerce Department will report tomorrow. Incomes rose 0.4 percent after a 0.1 percent gain in November, the survey showed.

·         Home prices continue to fall as housing remains a weak link in the recovery. The S&P Case-Shiller (SPCS20Y%) index of prices in 20 cities fell 3.3 percent in November from a year earlier, compared with a 3.4 percent decline in the 12 months ended in October, economists forecast the group will say on Jan. 31.

Bloomberg Survey

==============================================================

                        Release    Period    Prior     Median

Indicator                 Date               Value    Forecast

==============================================================

Pers Inc MOM%             1/30      Dec.      0.1%      0.4%

Pers Spend MOM%           1/30      Dec.      0.1%      0.1%

Case Shiller Monthly YO   1/31      Nov.     -3.4%     -3.3%

Consumer Conf Index       1/31      Jan.      64.5      68.0

NAPM Milwaukee Index      1/31      Jan.      57.8      57.5

ADP Payroll ,000's        2/1       Jan.      325       183

ISM Manu Index            2/1       Jan.      53.9      54.5

Construct Spending MOM%   2/1       Dec.      1.2%      0.5%

Initial Claims ,000's     2/2      28-Jan     377       370

Nonfarm Payrolls ,000's   2/3       Jan.      200       150

Private Payrolls ,000's   2/3       Jan.      212       168

Manu Payrolls ,000's      2/3       Jan.       23        11

Unemploy Rate %           2/3       Jan.      8.5%      8.5%

ISM NonManu Index         2/3       Jan.      52.6      53.2

Factory Orders MOM%       2/3       Dec.      1.8%      1.5%

=============================================================

Australian Wrap:

·         The Australian share market is set for a soft to the week following weakness on European markets and a mixed performance on Wall Street.

·         On the ASX24, the SPI futures index last traded 5 points higher at 4255. The Aussie dollar is higher, buying $US1.0637, up from $US1.0611 late on Friday.

·         In the US, markets were mixed after the government reported that economic growth for October through to December came in at an annual rate of 2.8 per cent, lower than the three per cent hoped for by economists.

·         Housing data dominates local economics news this week, with RP Data/Rismark home prices for December due tomorrow, new homes sales on Wednesday and building approvals on Thursday.

·         Tomorrow sees the release of private sector credit for December 2011, with economists expecting a 0.3 per cent gain for the month for a 3.6 per cent annual rise, just 0.1 per cent higher than December 2010.

What you need to know

The SPI was 5 points higher at 4255
The $A was trading at $US1.0637
In the US, the S&P500 lost 0.16% to 1316.33
In Europe, the FTSE100 lost 1.07% to 5733.45
Gold added 0.9% to $US1735.96 an ounce
WTI crude oil added 67 US cents to $US111.46 a barrel
RJ/CRB commodities index 0.05% to 317.57

Americas

Europe, Africa and Middle East

Asia-Pacific

Company news
Woodside Petroleum Ltd (ASX:WPL) has denied media reports it is looking to sell most of its 50 per cent stake in the Browse liquefied natural gas project in Western Australia. In a statement to the market, Woodside says it is conducting a limited process to assess the potential sale of a minority portion of the company's equity in the development, given significant interest from a number of parties. Meanwhile, Woodside has stopped production at more of its oil fields off the WA coast due to the threat of tropical cyclone Iggy. Woodside shares advanced 1.5 per cent, closing at $34.48.

ResMed Inc (ASX:RMD) shares have soared despite the sleep disorder company reporting a fall in profit for the first half of the financial year. ResMed reported a net profit for the first half of $110 million, a 2 per cent drop when compared to the prior corresponding period. Revenue lifted 10 per cent. ResMed shares gained 7.48 per cent today, closing at $2.73.

National Australia Bank Ltd (ASX:NAB) has released a statement saying it will make a "special contribution" of £130 million to the Clydesdale Bank pension scheme. The funds will reduce the Glasgow-based subsidiary's pension deficit liability.

And, Qantas Airways Limited (ASX:QAN) and Malaysia Airlines are said to be considering a joint venture for a premium airline based in KL according to media reports.

Commodities:

Precious Metals:

Precious metals had a quiet start on the last session of the week. Trading was subdued as investors considered the strong rally since Wednesday evening following the doveish outlook from the US Federal Reserve. But prices ticked higher as the morning progressed and buying increased once the US markets opened. The euro strengthened against the dollar as hopes were raised of an agreement between private holders of Greek bonds and European finance ministers. Precious metals rose further following the release of lower-than-expected US GDP Price Index which came in at +0.4% against an expectation of +2.0%.  This is one of the US Fed's preferred inflation measures, and the sharp deceleration again raised the prospect of additional central bank stimulus. Gold is up around 10% this month so far, while silver has soared 20%. So far, pull-backs on profit-taking have been shallow and short-lived, leaving many would-be buyers frustrated.

Crude Oil:

Crude trading was mixed today with prices little-changed in early trade. The first look at fourth quarter US GDP came in below expectations with annualised growth coming in at +2.8% against an expectation of +3.0%. In addition, third quarter GDP was revised down sharply from 2.5% to 1.8%. This took traders by surprise given the recent strength in US data, although the numbers support the cautious outlook over the US economy as expressed by the US Federal Reserve on Wednesday. The news depressed buying interest, although the sharp fall in the GDP Price Index had traders wondering if inflation would now fall significantly below the US Federal Reserve's 2% target rate. If so, then further central bank stimulus seems likely. On Sunday, Iran's parliament votes on whether to halt oil exports to the EU, undercutting the implementation of the EU's own embargo, due to start in July. Such a move would hit Greece, Spain and Italy particularly hard. It would leave these countries rushing to find alternative suppliers, and this concern led to a rally in crude by mid-session.

Grain Highlights:

TOP STORIES:

EU Banks Withdrawing From Financing Iran's Grain Imports

LONDON -(Dow Jones)- Major European banks, including Rabobank, have halted trade finance for grain or any agricultural products bound for Iran, European banks and traders told Dow Jones Newswires Friday.

STORIES OF INTEREST:

CME Group To Hold Meeting On Potential Rice-Contract Changes

CHICAGO (Dow Jones)--CME Group (CME) has formed industry focus groups to examine its rice-futures contract and will convene a Feb. 1 meeting to discuss possible changes.

Money Mangers Add To Soy Future Longs, Add Corn Short Positions

CHICAGO (Dow Jones) -- Money managers increased their net long position in Chicago Board of Trade soybean futures in the week ended Tuesday amid worries about the South America crop.

THE MARKETS:

US GRAIN AND SOY REVIEW: Corn Extends Gains On Improved Exports

CHICAGO (Dow Jones)-- U.S. corn futures ended higher Friday, climbing on improving export demand despite weakness in wheat and soybeans.

US LIVESTOCK REVIEW: Cattle Up Before Key Events; Hogs Rise Too

CHICAGO (Dow Jones)--U.S. live cattle futures finished a week filled with repositioning as participants squared books ahead of two much-anticipated developments: Weekly cash market sales and an annual USDA report.

Currencies:

Economy:

EURO ZONE

Consumer Confidence Jan final (9pm)

UNITED STATES

Personal Income Dec prev 0.1%(12.30am)

Personal Spending Dec prev 0.1% (12.30am)

Dallas Fed Mfg Index Jan prev –3.0%

(2.30am)