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Investing.com Weekly Wrap-Up 22 March 2013

March 22nd, 2013
in contributors

by Investing.com Staff, Investing.com

U.S. stocks rise on Cyprus optimism, earnings; Dow gains 0.63%

investing.com-logoStronger-than-expected earnings reports in the U.S. coupled with hopes Cyprus will find a way out of its financial crisis sent U.S. stocks finishing higher on Friday.

At the close of U.S. trading, the Dow Jones Industrial Average finished up 0.63%, the S&P 500 index ended up 0.72%, while the Nasdaq Composite index rose 0.70%.

Follow up:

Nike and Tiffany released quarterly earnings earlier that surprised many analysts, which sparked a rally in U.S. stock markets on sentiment consumer demand continues to improve.

Consumer spending drives about 70% of the U.S. economy.

Meanwhile, markets remained hopeful Cyprus will raise EUR5.8 billion in fresh revenues, a prerequisite to tap EUR10 billion in multilateral financing arranged by eurozone nations and the International Monetary Fund.

Cyprus recently rejected calls from its lenders to tax bank deposits as part of an effort to raise money and meet requirements to access bailout money.

While the country rejected such a proposal amid widespread criticism at home, Cypriot policymakers were moving closer to alternative plans that included Greece taking over Cypriot banks, which eased fears of a messy exit from the eurozone.

Better-than-expected jobs data released on Thursday in the U.S. pumped up prices as well.

The U.S. Department of Labor reported Thursday that the number of people filing for initial jobless benefits last week rose by 2,000 to a seasonally adjusted 336,000, below expectations for an increase of 8,000 to 342,000.

Leading Dow Jones Industrial Average performers included Hewlett-Packard, up 3.14%, Wal-Mart Stores, up 1.57%, and 3M, up 1.42%.

The Dow Jones Industrial Average's worst performers included UnitedHealth Group, down 1.07%, Cisco Systems, down 0.43%, and DuPont, down 0.16%.

European indices, meanwhile, finished largely lower.

After the close of European trade, the EURO STOXX 50 fell 0.08%, France's CAC 40 fell 0.12%, while Germany's DAX 30 finished down 0.27%. Meanwhile, in the U.K. the FTSE 100 finished up 0.07%.

Forex

The U.S. dollar traded largely lower against most other major currencies on Friday amid hopes Cyprus will steer itself away from financial collapse and avoid a possible exit from the eurozone, which enticed investors out of the safety of the greenback.

In U.S. trading on Friday, EUR/USD was up 0.66% at 1.2985.

Cyprus recently rejected calls from its eurozone neighbors and the International Monetary Fund to tax bank deposits as part of an effort to raise EUR5.8 billion, a requirement for the country to tap a larger EUR10 billion bailout package.

While Cypriot lawmakers rejected such a proposal amid widespread criticism at home, they were moving closer to alternative plans that included Greece taking over Cypriot banks.

Cyprus must come up with a plan to raise EUR5.8 billion by Monday or risk seeing the European Central Bank halt the flow of emergency funding into its financial sector.

Weaker-than-expected German business sentiment data fueled some dollar demand though Cyprus remained the market's chief steering current.

The Ifo Institute for Economic Research in Munich reported earlier that Germany's business climate index dropped to 106.7 in March from 107.4 in February, defying market expectations for a gain to 107.6.

The greenback, meanwhile, was down against the pound, with GBP/USD trading up 0.39% at 1.5232.

The dollar was down against the yen, with USD/JPY trading down 0.38% at 94.54, and down against the Swiss franc, with USD/CHF trading down 0.53% at 0.9414.

The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.19% at 1.0229, AUD/USD up 0.05% at 1.0446 and NZD/USD trading up 0.46% at 0.8354.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.56% at 82.54.

The U.S. dollar fell against its Canadian counterpart on Friday after rising oil prices sparked demand for the loonie.

In U.S. trading on Friday, USD/CAD hit 1.0224, down 0.23%, up from a low of 1.0220 and off a high of 1.0265.

The pair sought to test support at 1.0201, Thursday's low, and resistance at 1.0284, Tuesday's high.

Hopes Cyprus and its European neighbors will steer the island nation out of its financial crisis sent petroleum prices rising earlier, which bolstered the currency in oil-rich Canada.

Greece has reportedly agreed to take control of its Cypriot banking units, which fueled hopes the country will avoid a messy exit from the eurozone and rattle the global economy, which would cut into demand for fuels and energy.

Better-than-expected U.S. economic indicators released Thursday bolstered oil as well, which brought up the loonie with it.

Gold

Gold prices fell in U.S. trading on Friday as news Greece may raise the stakes it owns in Cypriot banks to ease the financial crisis there enticed investors out of gold and into the euro.

Gold prices have risen in recent sessions via demand from investors looking for hard assets to hedge against a weakening euro.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery were down 0.42% at USD1,607.10 a troy ounce in U.S. trading on Friday, up from a session low of USD1,602.90 and down from a high of USD1,615.30 a troy ounce.

Gold futures were likely to test support USD1,590.80 a troy ounce, Monday's low, and resistance at USD1,615.80, Thursday's high.

Reports that Athens may help Cyprus contain its financial crisis sparked a rally for the single currency, which came at gold's expense.

Gold and the U.S. dollar tend to trade inversely from one another, though the yellow metal has lately become the hedge of choice against the euro during the latest eurozone crisis.

Cyprus's parliament is due to hold meetings throughout the day to mull an ultimatum imposed by its eurozone neighbors and the International Monetary Fund to raise EUR5.8 billion necessary for a EUR10 billion bailout package.

Representatives from lending bodies originally called on Cyprus to raise the money by slapping a one-time tax on bank deposits, which rattled markets worldwide amid fears the do-not-touch status of bank accounts may be changing when crafting European bailouts.

Still, proposals remain on the table call for taxing bank accounts holding at least EUR100,000, which watered down Friday's optimism by fueling uncertainty.

Cyprus must come up with a plan to raise EUR5.8 billion by Monday or risk seeing the European Central Bank halt the flow of emergency funding into its financial sector.

Still, hopes for a breakthrough sent the euro rising and gold falling on Friday.

Elsewhere on the Comex, silver for May delivery was down 1.82% at USD28.680 a troy ounce, while copper for May delivery was up 0.85% and trading at USD3.464 a pound.

Oil

Oil prices were up in U.S. trading on Friday on talk Greece may hike its stakes in Cypriot banks and contain the financial crisis in the island nation.

Oil still enjoyed support from better-than-expected U.S. jobless claims released Thursday.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in May traded up 0.62% at USD93.02 a barrel on Friday, off from a session high of USD93.33 and up from an earlier session low of USD92.33.

News that Greece may help Cyprus contain its financial crisis, even if partially, fueled demand for oil, as a messy Cypriot exit from the eurozone could rattle the broader European economy and crimp demand for fuels and energy.

Elsewhere, the National Association of Realtors, meanwhile, reported that existing home sales rose 0.8% to 4.98 million units in February, the highest level in three years.

On the supply side of the market, OPEC, which accounts for 40% of global oil output, said it will trim shipments by 40,000 barrels per day to 23.72 million barrels a day for the weeks ending April 6, which pushed up prices as well.

Weaker-than-expected German business sentiment data, however, dampened the rally.

The Munich-based Ifo Institute for Economic Research reported earlier Friday that Germany's business climate index dropped to 106.7 in March from 107.4 in February, defying market expectations for a gain to 107.6.

Elsewhere on the ICE Futures Exchange, Brent oil futures for May delivery were up 0.06% at USD107.53 a barrel, up USD14.51 from its U.S. counterpart.

Natural Gas

Natural gas futures extended Thursday's losses into Friday, as investors sold on reports that U.S. supplies dropped less than expected last week.

On the New York Mercantile Exchange, natural gas futures for delivery in April traded at USD3.929 per million British thermal units, down 0.17%.

The commodity hit a session low of USD3.914 and a high of USD4.005.

The U.S. Energy Information Administration said in its weekly report on Thursday that natural gas storage in the U.S. in the week ended March 15 fell by 62 billion cubic feet, short of market expectations for a drop of 70 billion cubic feet.

Inventory withdrawals were flat in the same week a year earlier, while the five-year average change for the week is a decline of 26 billion cubic feet.

Total U.S. natural gas storage stood at 1.876 trillion cubic feet as of last week. Stocks were 502 billion cubic feet less than last year at this time and 162 billion cubic feet above the five-year average of 1.714 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 21 billion cubic feet above the five-year average, following net withdrawals of 47 billion cubic feet.

Stocks in the Producing Region were 63 billion cubic feet above the five-year average of 691 billion cubic feet after a net withdrawal of 15 billion cubic feet.

The data wiped out earlier gains.

The commodity hit near 18-month highs this week on forecasts for temperatures to remain below normal for the coming days

In its five-day forecast, industry group MDA Weather Services predicted below-normal temperatures to stick around in the heavily populated eastern half of the U.S.

The heating season from November through March is the peak demand period for U.S. gas consumption. Nearly 50% of all U.S. households use gas for heating.

Still, prices began to edge lower on Friday on sentiment that after below-normal temperatures lingering over the eastern half of the U.S. will give way to springtime weather patterns that will remain firmly in place.









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