Investing.com Weekly Wrap-Up 25 January 2012

January 25th, 2013
in contributors

Closing the Week with Investing.com

by Investing.com Staff, Investing.com

U.S. stock prices rose on Friday, with the S&P 500 extending its longest winning streak since 2004 on better-than-expected earnings hitting the wire in the U.S. as investing.com-logowell as on firming German business confidence data.

At the close of U.S. trading, the Dow Jones Industrial Average finished up 0.51%, the S&P 500 index was up 0.54%, while the Nasdaq Composite index gained 0.62%.

Follow up:

Fourth-quarter earnings continue to come in better than expected for many companies in the U.S., enticing market players out of safe-haven dollar positions and into stock markets, which was bearish for the dollar and bullish for equities on Friday.

Most recently, Starbucks and Procter & Gamble released earnings that surprised on the upside.

Stocks also rose after the Ifo Institute for Economic Research said that its index of German business confidence improved to 104.2 in January from 102.4 the previous month, beating expectations for a rise to 103.0.

Elsewhere, the European Central Bank said that banks will repay EUR137.159 billion in three-year loans next week, opting to repay the money early, a sign the European financial sector and broader economy may be returning to health.

The European Central Bank made the three-year loans available to banks last year to increase liquidity levels to combat the debt crisis.

Weak U.S. housing data cooled gains on Friday.

The U.S. Census Bureau reported that new home sales rose less than anticipated in December, gaining by 369,000 units after an increase of 398,000 in the previous month.

Analysts had expected new home sales to rise by 385,000 units last month.

Leading Dow Jones Industrial Average performers included Procter & Gamble, up 3.93%, JPMorgan Chase & Co., up 1.66%, and Johnson & Johnson, up 1.12%.

The Dow Jones Industrial Average's worst performers included Wal-Mart Stores, down 1.13%, Caterpillar, down 1.08%, and Boeing, down 0.39%.

European indices, meanwhile, finished higher.

After the close of European trade, the EURO STOXX 50 rose 0.78%, France's CAC 40 rose 0.69%, while Germany's DAX 30 finished up 1.42%. Meanwhile, in the U.K. the FTSE 100 finished up 0.12%.

Forex

The dollar traded lower against most major currencies on Friday after German confidence data beat expectations, sparking a global risk-on trading session that came at the dollar's expense.

Rising equities indices pushed the greenback lower as well.

In U.S. trading on Friday, EUR/USD was up 0.63% at 1.3460.

Fourth-quarter earnings continue to come in better than expected for many companies, enticing market players off the sidelines and into stock markets, which was bearish for the dollar on Friday.

Elsewhere, the dollar weakened after the Ifo Institute for Economic Research said that its index of German business confidence improved to 104.2 in January, from 102.4 the previous month, beating expectations for a rise to 103.0.

Elsewhere, the European Central Bank said that banks will repay EUR137.159 billion in three-year loans next week, opting to hand back the money early, a sign the European financial sector may be returning to health.

The European Central Bank made the three-year loans available to banks last year to increase liquidity levels to combat the debt crisis.

The dollar, meanwhile, saw some safe-haven demand after the U.S. Census Bureau reported that new home sales rose less than anticipated in December.

The greenback, meanwhile, was down against the pound, with GBP/USD trading up 0.07% at 1.5799.

The dollar rose against the yen, with USD/JPY trading up 0.70% at 90.97 and was down against the Swiss franc, with USD/CHF trading down 0.22% at 0.9268.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.43% at 1.0068, AUD/USD down 0.27% at 1.0423 and NZD/USD trading up 0.02% at 0.8382.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.26% at 79.82.

On Thursday, the U.S. is to publish private sector data on existing home sales, a leading indicator of economic health.

The euro rose against the yen on Friday after German economic confidence data beat expectations earlier.

The yen, meanwhile, continued to come under pressure after an economic ministry official voiced comfort with a weaker currency.

In U.S. trading on Friday, EUR/JPY hit 122.66, up 1.51% and up from a low of 120.67 and off a high of 122.78.

The pair sought to test support at 120.67, the session low, and resistance at 122.78, the session high.

On Thursday, Japan's Deputy Economy Minister Yasutoshi Nishimura said a USD/JPY exchange rate of 100 would not cause major concerns to the government, which sent the Japanese currency plunging, with losses extending into Friday trading.

Prime Minister Shinzo Abe has made repeated calls for looser monetary policy and greater tolerance for inflation as part of more pro-growth economic strategies.

Earlier this week, the Bank of Japan said it would start open-ended asset purchases from banks to stimulate the economy though not until 2014.

Bank of Japan Governor Masaaki Shirakawa reiterated on Friday that the monetary authority remains committed loose monetary policies.

The euro, meanwhile, was up against the pound and up against the Canadian dollar, with EUR/GBP trading up 0.58% at 0.8522 and EUR/CAD trading up 1.17% at 1.3567.

Gold

Gold prices fell on Friday in a second day of profit-taking despite firming German business confidence data, which sent investors opting for the euro and equities over gold in a risk-on trading session.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery were down 0.72% at USD1,657.85 a troy ounce in U.S. trading on Thursday, up from a session low of USD1,655.15 and down from a high of USD1,671.55 a troy ounce.

Gold futures were likely to test support USD1,653.55 a troy ounce, the low from Jan. 11, and resistance at USD1,695.85, Tuesday's high.

The dollar, meanwhile, saw downward pressure after the U.S. Census Bureau reported that new home sales rose less than anticipated in December.

The news sparked demand for higher-yielding asset classes though investors avoided gold and opted instead to go long on equities, viewed by many as nicely valued.

Meanwhile on the Comex, silver for March delivery was down 1.70% and trading at USD31.182 a troy ounce, while copper for March delivery was down 0.56% and trading at USD3.656 a pound.

Oil

Crude oil futures rose in U.S. trading on Friday on hopes bank repayments to the European Central Bank indicate that the European and global economy may be on the mend.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in March traded at USD96.29 a barrel on Friday, up 0.35%, off from a session high of USD96.53 and up from an earlier session low of USD95.45.

Earlier in Europe, the European Central Bank said that banks will repay EUR137.159 billion in three-year loans next week, opting to hand back the money early, a sign the European financial sector may be returning to health.

The European Central Bank made the three-year loans available to banks last year to increase liquidity levels to combat the debt crisis, and energy markets applauded the move, interpreting the news as a sign the global economy may be improving.

Also on Friday, oil prices gained after the Ifo Institute for Economic Research said that its index of German business confidence improved to 104.2 in January, from 102.4 the previous month, beating expectations for a rise to 103.0.

Capping gains, however, were data pointing to rising U.S. stockpiles.

In a report, Energy Information Administration said that U.S. crude oil inventories rose by 2.813 million barrels last week after declining by 951,000 barrels in the preceding week.

Analysts had expected U.S. crude oil stockpiles to rise by 1.750 million barrels last week.

Elsewhere on the ICE Futures Exchange, Brent oil futures for March delivery were up 0.28% at USD113.59 a barrel, up USD17.30 from its U.S. counterpart.

Natural Gas

Natural gas futures rose on Friday after weather forecasts predicted warmer temperatures to return next month though a little later than once thought.

On the New York Mercantile Exchange, natural gas futures for delivery in February traded at USD3.454 per million British thermal units, up 0.25%.

The commodity hit a session low of USD3.413 and a high of USD3.479.

In the U.S. earlier, MDA Weather Services predicted colder-than-normal temperatures to stick around through Feb. 8, diverging from earlier forecasts for a warming trend to return at that time.

Natural gas futures are very sensitive to weather reports in the U.S. winter.
The U.S. heating season running from November through March sees peak demand for gas.

About half of U.S. households use gas for heating purposes, according to Energy Department data.

Prices still rose on the U.S. Energy Information Administration's Thursday announcement that storage in the U.S. in the week ended Jan. 18 fell by 172 billion cubic feet, in line with market expectations.

Inventories fell by 162 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 176 billion cubic feet.

Total U.S. natural gas storage stood at 2.996 trillion cubic feet as of last week. Stocks were 157 billion cubic feet less than last year at this time and 320 billion cubic feet above the five-year average of 2.676 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 118 billion cubic feet above the five-year average, following net withdrawals of 80 billion cubic feet.

Stocks in the Producing Region were 154 billion cubic feet above the five-year average of 906 billion cubic feet, after a net withdrawal of 53 billion cubic feet.









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