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Investing.com Weekly Wrap-Up 01 March 2013

March 1st, 2013
in contributors

by Investing.com Staff, Investing.com

U.S. Stocks Gain, Brush Off Fiscal Woes

investing.com-logoU.S. stock prices finished Friday in positive territory after traders bought on solid sentiment and manufacturing data, brushing off concerns that inbound government spending cuts could trim growth rates for the year.

At the close of U.S. trading, the Dow Jones Industrial Average finished up 0.25%, the S&P 500 index ended up 0.23%, while the Nasdaq Composite index gained 0.30%.

Follow up:

Automatic spending cuts totaling USD85 billion were due to begin taking effect in the U.S. at the end of Friday, which could affect many federal programs and result in lost government and private-sector jobs, shaving as much as half a percentage point off growth rates for this year, according to some estimates.

Uncertainty as to whether President Barack Obama and congressional Republicans can find common ground to take the pain out of sharp fiscal adjustments failed to rattle nerves in equities markets as it did elsewhere, as fourth-quarter earnings continue to please Wall Street.

Solid data released earlier boosted stock prices as well.

The Institute for Supply Management reported earlier that its manufacturing PMI rose to 54.2 in February, the highest level since June and well above a 53.1 reading in January.

Analysts had expected the February index to fall to 52.5.

The Thomson Reuters/University of Michigan consumer sentiment index rose to 77.6 in February from 76.3 the previous month.

Analysts had expected the index to remain unchanged.

Leading Dow Jones Industrial Average performers included Wal-Mart, up 1.48%, Walt Disney, up 1.41%, and IBM, up 1.03%.

The Dow Jones Industrial Average's worst performers included Caterpillar, down 1.12%, Alcoa, down 0.94%, and United Technologies, down 0.45%.

European indices, meanwhile, where largely lower.

After the close of European trade, the EURO STOXX 50 fell 0.64%, France's CAC 40 fell 0.62%, while Germany's DAX 30 finished down 0.43%. Meanwhile, in the U.K. the FTSE 100 finished up 0.28%.

Forex

The dollar firmed against most major currencies on Friday as cuts to public spending were set to take effect at the end of the day and potentially cool growth for the entire year.

In U.S. trading on Thursday, EUR/USD was down 0.27% at 1.3021.  A global risk-off trading session sent investors chasing the dollar throughout the session.

Soft European and Chinese data spooked investors and fanned concerns the global economy continues to battle headwinds, which overshadowed positive data in the U.S. somewhat

China reported earlier that the country's February purchasing managers' index fell to 50.1 in February from 50.4 in January, defying economists' expectations for a 50.5 reading.

While readings above 50 signal expansion, the decline caught markets off guard.

Meanwhile, data released earlier revealed that the eurozone's unemployment rate rose to a new record high of 11.9% in January from 11.8% the previous month.

Analysts had expected the rate to remain unchanged at 11.8% in January.
Not all headlines were as gloomy.

Also in Europe, the Markit research group reported the eurozone's purchasing managers' index hit 47.9 in February, beating markets calls for the reading to remain unchanged at 47.8.

Germany's PMI hit 50.3 compared to market calls for an unchanged reading of 50.1

Spain's manufacturing purchasing managers' index jumped to 46.8 in February from 46.1 the previous month, beating expectations for a rise to 46.5, while Italy's manufacturing PMI fell to 45.8 last month from 47.8 in January, compared to expectations for a reading of 47.6.

Elsewhere, official data revealed that German retail sales rose 3.1% in January from December, beating market calls for a 1% monthly increase after a 2.1% decline the previous month.

In the U.S., positive economic indicators capped the dollar's gains and sent investor pouring money into equities, though fiscal uncertainty still served as the currency market's chief weather vane.

The Institute for Supply Management reported earlier that its manufacturing PMI rose to 54.2 in February, the highest level since June and well above a 53.1 reading in January.

Analysts had expected the February index to fall to 52.5.

The Thomson Reuters/University of Michigan consumer sentiment index rose to 77.6 in February from 76.3 the previous month.

Analysts had expected the index to remain unchanged.

The greenback, meanwhile, was up against the pound, with GBP/USD trading down 0.92% at 1.5025.

The dollar rose against the yen, with USD/JPY trading up 1.07% at 93.56, and was up against the Swiss franc, with USD/CHF trading up 0.74% at 0.9434.

The yen weakened Japan’s Prime Minister Shinzo Abe nominated Asian Development Bank President Haruhiko Kuroda, a fan of aggressive monetary easing, to replace current Bank of Japan Governor Masaaki Shirakawa, who favored more hawkish policies.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.22% at 1.0284, AUD/USD down 0.19% at 1.0194 and NZD/USD trading down 0.11% at 0.8239.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.43% at 82.35.

In U.S. trading on Friday, USD/JPY was trading at 93.51, up 1.03%, up from a session low of 92.44 and off a high of 93.69.

The pair was likely to find support at 91.14, Wednesday's low, and resistance at 94.50, the high from Feb. 24.

Automatic spending cuts are due to take effect in the U.S. later in the day, which could affect many federal programs and end government jobs, shaving as much as a half a percentage point off growth rates for this year, according to some estimates.  This sent investors scurrying to the safe haven dollar.

The yen, meanwhile, continued to weaken after Japan’s Prime Minister Shinzo Abe nominated Asian Development Bank President Haruhiko Kuroda, a fan of aggressive monetary easing, to replace current Bank of Japan Governor Masaaki Shirakawa, who favored more hawkish policies.

Elsewhere in the U.S., positive economic indicators had little lasting impact on the USD/JPY pair.

The Institute for Supply Management reported earlier that its manufacturing PMI rose to 54.2 in February, the highest level since June and well above a 53.1 reading in January.

Analysts had expected the February index to fall to 52.5.

The Thomson Reuters/University of Michigan consumer sentiment index rose to 77.6 in February from 76.3 the previous month.

Analysts had expected the index to remain unchanged.

The yen, meanwhile was down against the pound and down against the euro, with GBP/JPY up 0.14% and trading at 140.54 and EUR/JPY trading up 0.78% at 121.81.

Gold

Gold prices slid on Friday as automatic spending cuts were set to take effect in the U.S., sparking fears the world's largest economy will grow less than originally expected this year that sent investors chasing the safe and liquid dollar.

Gold and the dollar normally trade inversely from one another.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery were down 0.37% at USD1,572.30 a troy ounce in U.S. trading on Friday, up from a session low of USD1,564.20 and down from a high of USD1,586.60 a troy ounce.

Gold futures were likely to test support USD1,564.20 a troy ounce, the earlier low, and resistance at USD1,619.40, Tuesday's high.

Positive data out of the U.S. managed to curb gold's losses, allowing for choppy trading at times.

The Institute for Supply Management reported earlier that its manufacturing PMI rose to 54.2 in February, the highest level since June and well above a 53.1 reading in January.

Analysts had expected the February index to fall to 52.5.

The Thomson Reuters/University of Michigan consumer sentiment index rose to 77.6 in February from 76.3 the previous month.

Analysts had expected the index to remain unchanged.

Meanwhile on the Comex, silver for May delivery was up 0.38% and trading at USD28.540 a troy ounce, while copper for May delivery was down 1.25% and trading at USD3.503 a pound.

Oil

Oil prices dropped in U.S. trading on Friday after Chinese manufacturing data disappointed.

Investors also avoided the commodity due to U.S. budgetary uncertainties that could cut into growth rates later this year.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in April traded at USD90.55 a barrel on Friday, down 1.63%, off from a session high of USD91.97 and up from an earlier session low of USD90.30.

China reported earlier that the country's February purchasing managers' index fell to 50.1 in February from 50.4 in January, defying economists' expectations for a 50.5 reading.

While readings above 50 signal expansion, the decline caught markets off guard and sent oil prices falling.

China is the world’s second-largest consumer of oil trailing the U.S., where budgetary issues continued on Friday.

Elsewhere on the ICE Futures Exchange, Brent oil futures for April delivery were down 0.91% at USD110.36 a barrel, up USD19.81 from its U.S. counterpart.

Natural Gas

Natural gas futures edged lower on Friday after investors priced in chilly weather forecasts and bullish supply data, locked in gains and later sold for profits.

On the New York Mercantile Exchange, natural gas futures for delivery in April traded at USD3.474 per million British thermal units, down 0.33%.  The commodity hit a session low of USD3.441 and a high of USD3.518.

Cold and snowy weather continued to settle in for much of the heavily populated central and eastern portions of the U.S., which sent prices rising earlier.

Investors also bought earlier in the day on bullish supply data released by the U.S. government on Thursday.

The U.S. Energy Information Administration said in its weekly report released earlier that natural gas storage in the U.S. in the week ending Feb. 22 fell by 171 billion cubic feet compared to expectations for a drop of 167 billion cubic feet.

Inventories fell by 106 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 118 billion cubic feet.

Total U.S. natural gas storage stood at 2.299 trillion cubic feet as of last week. Stocks were 307 billion cubic feet less than last year at this time and 308 billion cubic feet above the five-year average of 1.921 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 71 billion cubic feet above the five-year average, following net withdrawals of 109 billion cubic feet.

Stocks in the Producing Region were 164 billion cubic feet above the five-year average of 711 billion cubic feet after a net withdrawal of 50 billion cubic feet.

By afternoon trading on Friday, however, investors sold for profits and focused on other markets, which allowed natural gas prices to cool a little.









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