Weekly Wrap-Up 21 June 2013

June 21st, 2013
in contributors

by Staff,

U.S stocks end up after volatile week; Dow gains 0.28%

U.S. stocks finished Friday mixed to higher after a volatile week marked by two sessions of heavy losses stemming from growing expectations for the Federal to begin scaling back stimulus programs in the coming months.

Stimulus programs tend to push up stocks as a side effect, and talk of their dismantling can send equities prices dropping.  Trading volume was heavy.

At the close of U.S. trading, the Dow Jones Industrial Average finished up 0.28%, the S&P 500 index ended up 0.27%, while the Nasdaq Composite index fell 0.22%.

Follow up:

At the close of U.S. trading, the Dow Jones Industrial Average finished up 0.28%, the S&P 500 index ended up 0.27%, while the Nasdaq Composite index fell 0.22%.

Stocks rose on Friday after a wild week marked by growing concerns that the Federal Reserve will soon scale back stimulus measures.

On Thursday, the Federal Reserve Bank of Philadelphia said that its manufacturing index rose to 12.5 in June from -5.2 in May, well above expectations for a -2.0 reading.

A separate report showed that U.S. existing home sales climbed 4.2% to 5.18 million units in May from April’s total of 4.97 million, far surpassing market calls for a 0.6% increase.

Federal Reserve stimulus tools such as a monthly USD85 billion bond-buying program have pushed up stock prices in recent years, and the end of such liquidity injections could prompt investors to park their money elsewhere at least for a while, which fueled a massive day of selling on Wall Street and elsewhere.

Investors returned on Friday, however, on sentiment that a Fed decision to wind down stimulus measures would point to an increasingly robust economy, which would be bullish for stock in the long run.

Elsewhere, tech giant Oracle shares plunged 9% after missing sales expectations.

Leading Dow Jones Industrial Average performers included Procter & Gamble, up 2.84%, Coca-Cola, up 1.58%, and Merck, up 1.53%.

The Dow Jones Industrial Average's worst performers included Hewlett-Packard, down 2.27%, Bank of America, down 1.47%, and IBM, down 1.03%.

European indices, meanwhile, finished lower.

After the close of European trade, the EURO STOXX 50 fell 1.43%, France's CAC 40 fell 1.11%, while Germany's DAX 30 finished down 1.76%. Meanwhile, in the U.K. the FTSE 100 finished down 0.70%.


Forex - The dollar extended its broad advance against most major currencies on Friday amid widespread sentiments that the Federal Reserve will soon begin to scale back stimulus programs.

Better-than-expected regional factory and housing data in the U.S. on Thursday came a day after Fed Chairman Ben Bernanke said stimulus programs could end if the economy show signs of improvement.

Monetary stimulus tools such as the Fed's monthly USD85 billion bond-buying program weaken the dollar to spur recovery, and talk of their dismantling can strengthen the U.S. currency.

In U.S. trading on Friday, EUR/USD was down 0.61% at 1.3139.

The dollar continued to climb in a session absent of major U.S. economic data mainly on sentiments that recent indicators point to an economy in less need of Federal Reserve support.

The greenback, meanwhile, was up against the pound, with GBP/USD trading down 0.51% at 1.5429.

The dollar was up against the yen, with USD/JPY up 0.53% at 97.78, and up against the Swiss franc, with USD/CHF trading up 0.75% at 0.9344.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.68% at 1.0455, AUD/USD up 0.53% at 0.9246 and NZD/USD trading up 0.24% at 0.7776.

Canada's official core consumer price index, which excludes volatile food and energy items, rose 0.2% in May, missing expectations for a 0.3% gain after a 0.1% increase the previous month.

The broader consumer price index rose 0.2% last month, disappointing expectations for a 0.4% increase, after a 0.2% contraction in April.

A separate report showed that core retail sales in Canada, excluding automobiles, fell 0.3% in April, compared to expectations for a flat reading after a 0.3% decline the previous month.

Broader retail sales rose 0.1% in April, missing expectations for 0.2% increase, after a flat reading the previous month.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.67% at 82.53.


Gold prices rose on Friday, edging up from lows not seen since September of 2010 after a manufacturing gauge for the Philadelphia area of the U.S. beat expectations and strengthened the dollar, which tends to trade inversely with gold.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery were up 0.48% at USD1,292.35 a troy ounce in U.S. trading on Friday, up from a session low of USD1,268.75 and down from a high of USD1,301.75 a troy ounce.

Gold futures were likely to find support at USD1,268.75 a troy ounce, the earlier low, and resistance at USD1,391.35, Monday's high.

Gold prices fell after Federal Reserve Chairman Ben Bernanke said Wednesday that monetary stimulus measures may taper this year and possibly end next year if the economy improves, though by Thursday, prices took a sharp nose dive after better-than-expected U.S. data confirmed expectations that Fed stimulus programs will begin winding down in the coming months.

Stimulus programs such as the Fed's monthly USD85 billion bond-buying program weaken the dollar to spur recovery, which makes gold an attractive hedge, though talk of their dismantling sends the dollar rising and gold falling.

Comex gold prices fell by as much as 6.5% on Thursday though bargain hunters viewed the commodity as oversold on Friday and took up positions in the metal and stabilized prices.

Elsewhere on the Comex, silver for July delivery was up 0.25% at USD19.873 a troy ounce, while copper for July delivery was up 0.47% and trading at USD3.077 a pound.


Crude prices extended Thursday's losses into Friday amid growing sentiments that the Federal Reserve is closer to scaling back monetary stimulus programs.

Stimulus measures such as the Fed's USD85 billion monthly bond-buying program weaken the dollar, though talk of their dismantling can strengthen the greenback.

A stronger greenback tends to make oil a less attractively priced asset in dollar-denominated exchanges, especially in the eyes of investors holding other currencies.

On the New York Mercantile Exchange, light sweet crude futures for delivery in August traded down 2.03% at USD93.21 a barrel on Friday, off from a session high of USD95.80 and up from an earlier session low of USD93.13.

Economic data sent the dollar gaining and oil falling, though the commodity did inch upwards briefly on concerns Syria's internal conflict may involve other nations across the oil-rich Middle East and disrupt supply.

Oil also continued to suffer after China’s HSBC preliminary manufacturing purchasing managers’ index fell to a nine-month low to 48.3 in June from 49.2 in May, indicating that the slowdown in manufacturing there may be worsening.

Analysts were expecting the number to improve to 49.4, and the disappointment fueled concerns that demand in the world's second-largest consumer of crude may be slipping in a global economy that is awash in crude.

On the ICE Futures Exchange, Brent oil futures for August delivery were down 1.42% at USD100.70 a barrel, up USD7.49 from its U.S. counterpart.

Natural Gas

Natural gas price carried Thursday's losses into Friday after official data revealed the stockpiles in the U.S. rose more than expected last week.

In the New York Mercantile Exchange, natural gas futures for delivery in July traded at USD3.785 per million British thermal units, down 2.39%.

The commodity hit a session low of USD3.767 and a high of USD3.904.

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 June 14 rose by 91 billion cubic feet, above market expectations for an increase of 90 billion.

Inventories rose by 63 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a rise of 80 billion cubic feet.

Total U.S. natural gas storage stood at 2.438 trillion cubic feet as of last week. Stocks were 559 billion cubic feet less than last year at this time and 47 billion cubic feet below the five-year average of 2.485 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 94 billion cubic feet below the five-year average, following net injections of 60 billion cubic feet.

Stocks in the Producing Region were 3 billion cubic feet above the five-year average of 930 billion cubic feet after a net injection of 20 billion cubic feet.

Investors avoided the commodity despite weather reports pointing to above-normal temperatures settling in for much of the lower 48 U.S. states for the rest of June.

Hotter temperatures send prices rising on sentiments that demand for natural gas will increase at the country's thermal power plants as businesses and households crank up their air conditioning.

Natural gas accounts for about a quarter of U.S. electricity generation.

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