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Investing.com Weekly Wrap-Up 08 March 2013

March 8th, 2013
in contributors

by Investing.com Staff, Investing.com

U.S. stocks extend gains on bullish jobless data; Dow rises 0.47%

U.S. stock prices closed at record highs for a fourth consecutive day on Friday after the U.S. government reported that the economy created far more jobs investing.com-logothan expected in February. 

At the close of U.S. trading, the Dow Jones Industrial Average finished up 0.46%, the S&P 500 index ended up 0.45%, while the Nasdaq Composite index rose 0.38%.

Follow up:

The U.S. private sector added 246,000 jobs in February, beating expectations for a 167,000 increase, following January's 140,000 rise.

The headline unemployment rate fell to 7.7% in February from 7.9% in January, beating analysts' calls for the rate to remain unchanged.

The data came a day after the Department of Labor said that the number of individuals filing for initial jobless benefits fell by 7,000 to 340,000 last week, defying expectations for an increase of 8,000 to 355,000.

The numbers sparked heavy demand for dollars on sentiment the Federal Reserve will wind down stimulus programs designed to create job demand by flooding the economy with liquidity to encourage investing.

The Fed is currently running a USD85 billion monthly bond-buying program known as quantitative easing, which weakens the dollar as a side effect, and Friday's jobs report stoked sentiments that such programs may wrap up sooner rather than later.

Leading Dow Jones Industrial Average performers included Walt Disney, up 1.88%, McDonald's, up 1.66%, and Home Depot, up 1.58%.

The Dow Jones Industrial Average's worst performers included Bank of America, down 1.55%, Intel, down 1.37%, and JPMorgan Chase, down 0.89%.

European indices, meanwhile, finished higher.

After the close of European trade, the EURO STOXX 50 rose 1.41%, France's CAC 40 rose 1.22%, while Germany's DAX 30 finished up 0.59%. Meanwhile, in the U.K. the FTSE 100 finished up 0.69%.

Forex

The dollar firmed against most major currencies on Friday after the U.S. government reported that hiring took place at a much faster pace in February than expected, which sent investors chasing dollar positions on sentiments monetary stimulus measures may expire soon.

In U.S. trading on Friday, EUR/USD was down 0.82% at 1.3001.

The strong U.S. employment numbers sparked heavy demand for dollars on sentiment the Federal Reserve will wind down stimulus programs designed to create job demand by flooding the economy with liquidity to encourage investing.

The Fed is currently running a USD85 billion monthly bond-buying program known as quantitative easing, which weakens the dollar as a side effect, and Friday's jobs report stoked sentiments that such programs may wrap up sooner rather than later.

Meanwhile in Europe, Germany's official industrial production rate came in flat for January, missing expectations for a 0.5% rise and well below a 0.6% increase the previous month.

Elsewhere, China reported that its trade surplus narrowed in February, coming in at USD15.3 billion from a USD29.2 surplus the previous month.

Analysts had expected the trade balance to fall into a deficit of USD8.8 billion last month.

The greenback, meanwhile, was up against the pound, with GBP/USD trading down 0.60% at 1.4925.

The dollar firmed against the yen, with USD/JPY trading up 1.27% at 96.03 after hitting highs not seen since August of 2009, and was up against the Swiss franc, with USD/CHF trading up 0.95% at 0.9516.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.01% at 1.0292, AUD/USD down 0.31% at 1.0236 and NZD/USD trading down 0.91% at 0.8209.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.79% at 82.77.

The dollar soared to highs against the yen not seen since 2009 on Friday after U.S. jobs data far surpassed expectations and fueled talk the Federal Reserve will wrap up stimulus measures that weaken the greenback by design to spur recovery.

In U.S. trading on Friday, USD/JPY was trading at 96.02, up 1.24%, up from a session low of 94.78 and off a high of 96.56.

The pair was likely to find support at 94.78, the earlier low, and resistance at 97.78, the high from Aug. 7, 2009.

The yen continued to come under pressure on sentiments that new leadership at the Bank of Japan will open the door to looser monetary policies.

The Bank of Japan met this week and made no changes to interest rates or to its JPY76 trillion asset purchasing-program at Governor Masaaki Shirakawa’s final meeting before incoming governor Haruhiko Kuroda takes over next month.

Kuroda, a former president of the Asian Development Bank, is a fan of aggressive monetary easing in line with Prime Minister Shinzo Abe, who has long prioritized economic growth over keeping inflation rates in a tight range.

The yen, meanwhile was down against the pound and down against the euro, with GBP/JPY up 0.62% and trading at 143.28 and EUR/JPY trading up 0.39% at 124.79.

Gold

Gold prices erased losses sustained earlier upon news that U.S. hiring far outpaced expectations in February, which sparked demand for the U.S. dollar.

Gold and the dollar normally trades inversely with one another.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery were up 0.07% at USD1,576.20 a troy ounce in U.S. trading on Friday, up from a session low of USD1,560.60 and down from a high of USD1,582.50 a troy ounce.

Gold futures were likely to test support USD1,554.80 a troy ounce, the low from Feb. 21, and resistance at USD1,1584.80, Thursday's high.

Gold prices plunged after the Bureau of Labor Statistics reported earlier that U.S. economy added a net 236,000 nonfarm payrolls in February, way more than an expected 160,000 increase and up above 119,000 reported in January.

Gold plunged upon release of the data while the dollar surged, though the precious metal quickly rebounded back into positive territory after investors began to view the metal as oversold.

Elsewhere on the Comex, silver for May delivery was up 0.53% and trading at USD28.962 a troy ounce, while copper for May delivery was down 0.31% and trading at USD3.510 a pound.

Oil

Oil prices slid in afternoon trading on Friday after the U.S. government unveiled February jobs data that far exceeded expectations and fueled strong demand for the greenback, which made oil and other commodities more expensive in dollar denominated exchanges. 

On the New York Mercantile Exchange, light, sweet crude futures for delivery in April traded at USD91.19 a barrel on Friday, down 0.40% and off from a session high of USD91.72 and up from an earlier session low of USD90.86.

Meanwhile a North Sea pipeline reopened and eased supply fears, which allowed Brent prices too cool somewhat.

Elsewhere on the ICE Futures Exchange, Brent oil futures for April delivery were down 1.08% at USD109.95 a barrel, up USD18.76 from its U.S. counterpart.

Natural Gas

Natural gas futures extended Thursday's gains into Friday as investors snapped up positions in the commodity after official data revealed supplies fell more than expected last week.

On the New York Mercantile Exchange, natural gas futures for delivery in April traded at USD3.628 per million British thermal units, up 1.30%.

The commodity hit a session low of USD3.566 and a high of USD3.634.

On Thursday, the U.S. Energy Information Administration said in its weekly report that natural gas storage in the week ending March 1 fell by 146 billion cubic feet, well beyond market expectations for a drop of 134 billion cubic feet.

The number fueled a two-day rally.

Inventories fell by 92 billion cubic feet in the same week a year earlier, while the five-year average change for the week represented a decline of 107 billion cubic feet.

Total U.S. natural gas storage stood at 2.083 trillion cubic feet as of last week. Stocks were 361 billion cubic feet less than last year at this time and 269 billion cubic feet above the five-year average of 1.814 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 73 billion cubic feet above the five-year average, following net withdrawals of 77 billion cubic feet.

Stocks in the Producing Region were 123 billion cubic feet above the five-year average of 694 billion cubic feet after a net withdrawal of 58 billion cubic feet.

Forecasts models continued to point to colder temperatures sticking around through the end of the winter, fueling talk a hike in demand for heating will burn off excess supply, which added to the rally.









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