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Investing.com Weekly Wrap-Up 05 July 2013

July 5th, 2013
in contributors

by Investing.com Staff, Investing.com

U.S stocks rise as jobs report surprises; Dow gains 0.98%

U.S. stocks rose on Friday after official data revealed that June saw more jobs created than investing.com-logothe markets were expecting.

At the close of U.S. trading, the Dow Jones Industrial Average finished up 0.98%, the S&P 500 index ended up 1.02%, while the Nasdaq Composite index rose 1.04%.

Follow up:

The Bureau of Labor Statistics reported earlier the U.S. economy added 195,000 nonfarm payrolls in June, well above analysts' calls for a 165,000 increase.

May's figure was revised upwards to 195,000 jobs from 175,000, while April's figure was revised upwards to 199,000 from 149,000.

The headline unemployment rate remained unchanged at 7.6% last month, while hourly earnings rose 0.4% compared to market calls for a 0.2% gain.

The numbers sent stocks gaining despite the rise in sentiments that monetary stimulus measures are on their way out by next year.

Today, the Federal Reserve is buying USD85 billion in Treasuries and mortgage securities each month to push down borrowing cross across the economy and drive recovery, a monetary stimulus tool known as quantitative easing that weakens the greenback and makes assets like stocks rise.

Talk of the end of stimulus tools often sends stocks falling, though stocks rose on sentiments that the end of stimulus means the beginning of a more robust period of economic expansion, which sparked a rally on Wall Street Friday.

Leading Dow Jones Industrial Average performers included American Express, up 2.37%, JPMorgan Chase, up 2.31%, and United Technologies, up 1.92%.

The Dow Jones Industrial Average's worst performers included McDonald's, down 0.52%, Procter & Gamble, down 0.34%, and Cisco Systems, which ended the day unchanged.

European indices, meanwhile, finished lower.

After the close of European trade, the EURO STOXX 50 fell 1.91%, France's CAC 40 fell 1.46%, while Germany's DAX 30 finished down 2.36%. Meanwhile, in the U.K. the FTSE 100 finished down 0.72%.

Forex

The dollar traded higher against most major currencies on Friday after official U.S. data revealed more hiring took place in June than expected, which refueled expectations that the Federal Reserve will taper its stimulus programs in the coming months.

Stimulus programs like the Fed's monthly USD80 billion asset-purchasing program weaken the dollar by flooding the economy with liquidity to push down borrowing costs, and talk of their dismantling can strengthen the greenback, often considerably.

In U.S. trading on Friday, EUR/USD was down 0.65% at 1.2831.

The greenback was up against the pound, with GBP/USD trading down 1.18% at 1.4894.

Bank of England Governor Mark Carney said earlier that interest rates may remain low for a while, which caught a few investors off guard and weakened the pound.

The dollar was up against the yen, with USD/JPY up 1.13% at 101.17, and up against the Swiss franc, with USD/CHF trading up 0.69% at 0.9634.

The USD/JPY pair was likely to find resistance at 102.53, the high from May 29, and support at 99.90, the earlier low.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.58% at 1.0576, AUD/USD down 0.94% at 0.9058 and NZD/USD trading down 1.55% at 0.7710.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.89% at 84.70.

Gold

Gold prices took a nosedive on Friday after a better-than-expected U.S. jobs report cemented expectations that the Federal Reserve remains on course to taper stimulus programs in the coming months.

Stimulus measures such as the Fed's monthly USD85 billion bond-buying program weaken the dollar and send gold rising as a hedge, and talk of their dismantling has a reverse effect.

Gold has been hit especially hard in recent weeks on sentiments that ultra-loose monetary policies across the globe over the last several years are coming to an end and will exacerbate the end of a bull market spanning for over a decade.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery were down 3.11% at USD1,212.95 a troy ounce in U.S. trading on Friday, up from a session low of USD1,207.25 and down from a high of USD1,249.75 a troy ounce.

Gold futures were likely to find support at USD1,180.35 a troy ounce, the low from June 28, and resistance at USD1,249.75, the earlier high.

Elsewhere on the Comex, silver for September  delivery was down 4.98% at USD18.718 a troy ounce, while copper for September delivery was down 3.55% and trading at USD3.062 a pound.

Oil

Crude prices posted strong gains on Friday after official U.S. data revealed the world's largest economy picked more jobs than expected in June.

On the New York Mercantile Exchange, light sweet crude futures for delivery in August traded up 1.57% at USD102.83 a barrel on Friday, off from a session high of USD103.08 and up from an earlier session low of USD100.91.

In the Middle East two days after Egyptian President Mohamed Mursi was deposed from power, reports of clashes across the country among groups for and against the former ruler sparked fears the conflict will spread across the oil-rich area of the world and threaten global supply, which sent prices gaining further.

In the Sinai Peninsula near Israel, gunmen reportedly fired rocket-propelled grenades at various military posts, killing one soldier and wounding two.

On the ICE Futures Exchange, Brent oil futures for August delivery were up 1.64% at USD107.28 a barrel, up USD4.45 from its U.S. counterpart.

Natural Gas

Natural gas prices dropped on Friday after updated weather forecasting models called for moderate temperatures across portions of the eastern half of the U.S.

Mild summer temperatures cut into the need for gas-fired electricity to cool homes and businesses, dampening demand for natural gas.

In the New York Mercantile Exchange, natural gas futures for delivery in August traded at USD3.583 per million British thermal units, down 2.91%.

The commodity hit a session low of USD3.578 and a high of USD3.681.

Weather forecasting services predicted normal temperatures coupled with pockets of below-normal temperatures to move across the Midwest and head east across the northeastern reaches of the country. 

While most areas in that region will experience near-normal temperatures and some may even seen warming trends, the absence of hotter-than-normal temperatures sparked a selloff in natural gas markets.

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









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