Weekly Wrap-Up 21 February 2014

February 21st, 2014
in contributors, syndication

by Staff,

U.S. stocks drifted lower on Friday after data on home sales disappointed Wall Street.

At the close of U.S. trading, the Dow Jones Industrial Average fell 0.19%, the S&P 500 index fell 0.19%, while the Nasdaq Composite index fell 0.10%.

Follow up:

The National Association of Realtors reported earlier that U.S. existing home sales declined 5.1% to 4.62 million units last month, outpacing expectations for a 4.3% drop to 4.68 million units.

In December, existing home sales were revised to a 0.8% rise to 487 million units from an initially estimated 1% increase.

The Federal Reserve has said it will pay close attention to data when deciding the pace at which it winds down its $65 billion monthly bond-buying program, which boosts stocks by lowering borrowing costs.

Stock-market investors concluded, however, that even if the Fed does take its time winding down the program, bond purchases are still on their way out.

Elsewhere, software maker Intuit, computer maker Hewlett-Packard and online travel booking company reported second-quarter results that beat market expectations.

Separately, shares rose after the Wall Street Journal reported the online retailer may add brands such as Ralph Lauren and J. Crew.

Leading Dow Jones Industrial Average performers included Walt Disney, up 1.19%, Nike, up 1.18%, and McDonald's, up 0.73%.

The Dow Jones Industrial Average's worst performers included Verizon, down 1.74%, Chevron, down 1.66%, and Intel, down 1.23%.

European indices, meanwhile, finished mixed.

After the close of European trade, the EURO STOXX 50 rose 0.36%, France's CAC 40 rose 0.59%, while Germany's DAX 30 rose 0.40%. Meanwhile, in the U.K. the FTSE 100 rose 0.37%.

Earlier Friday, the preliminary Thomson Reuters/University of Michigan consumer sentiment index remained unchanged at 81.2 for February, beating expectations for a fall to 80.6, which drew applause on Wall Street.


The greenback traded mixed against most major currencies on Friday after soft U.S. housing sales numbers sent investors betting that the Federal Reserve will taper its monthly bond-buying program at a very gradual pace.

The Federal Reserve has said it will pay close attention to data when deciding the pace at which it winds down is asset purchases, and the soft numbers stoked expectations the U.S. central bank will wind down its stimulus program very gradually.

Giving the dollar some support, however, were perceptions that the disappointing numbers were the product of a string of blizzards sweeping across the country that disrupted commerce, and more robust indicators will return once skies clear.

The euro, meanwhile, also continued to battle headwinds after Markit Economics reported Thursday that the euro zone composite output purchasing managers' index ticked down to a two-month low of 52.7 this month, down from January's 31-month high of 52.9.

Analysts were expecting a 53.1 reading, and the report softened the euro due to the continent's still high unemployment rates and soft inflationary pressures, which many think will prompt the European Central Bank to loosen policy if recovery flounders.

In U.S. trading on Friday, EUR/USD was up 0.19% at 1.3745.

The dollar was up against the yen, with USD/JPY up 0.26% at 102.54, and down against the Swiss franc, with USD/CHF down 0.29% at 0.8870.

The yen came under pressure after the minutes of its January policy meeting released earlier revealed that the Bank of Japan decided to avoid any misunderstanding about its monetary easing program, the bank needed "to provide a clear explanation that it did not strictly set this to end in two years."

In April last year, the BoJ had announced a policy overhaul that aimed to double the money supply and achieve 2% inflation within about two years.

The greenback was up against the pound, with GBP/USD down 0.05% at 1.6642.

U.K. retail sales dropped 1.5% in January, according to official data, outpacing consensus forecasts for a 1% decline. Retail sales in December were revised down to a 2.5% increase from a previously estimated 2.6% gain.

On a yearly basis, U.K. retail sales rose 4.3% last month, compared to expectations for a 5% increase, after a 5.3% advance in December.

The numbers softened the pound.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.26% at 1.1128, AUD/USD down 0.39% at 0.8970 and NZD/USD down 0.26% at 0.8282.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.06% at 80.27.


Gold prices edged higher on Friday after investors digested the latest in a series of hit-and-miss economic indicators, this time soft U.S. home sales, and concluded that even though the Federal Reserve remain on course to dismantling stimulus programs, it will do so gradually.

Stimulus tools such as the Fed's $65 billion in monthly bond purchases tend to weaken the dollar by driving down interest rates, which bolsters gold's appeal as a hedge.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at $1,325.40 a troy ounce during U.S. trading, up 0.65%, up from a session low of $1,316.30 and off a high of $1,327.20.

The April contract settled down 0.27% at $1,316.90 on Thursday.

Futures were likely to find support at $1,265.00 a troy ounce, the low from Feb. 10, and resistance at $1,332.20, Monday' high.

Gold prices have risen in recent weeks due to soft jobs, manufacturing and other economic indicators that have prompted many investors to speculate that the Federal Reserve will gradually reduce the pace at which it tapers its asset-buying stimulus program.

Uncertainty stemming from rough winter weather and its effects on economic indicators capped gains.

Multiple winter storms have bruised economic indicators, though many believe demand for goods and services continues to improve and won't alter the Fed from winding down its stimulus tools once skies clear.

Meanwhile, silver for March delivery was up 0.73% and trading at US$21.843 a troy ounce, while copper futures for March delivery were up 0.36% at US$3.291 a pound.


Crude prices edged lower on Friday after U.S. home sales missed expectations, while forecasts for a thawing trend over the next couple of days softened prices as well.

On the New York Mercantile Exchange, West Texas Intermediate crude for delivery in April traded at $102.38 a barrel during U.S. trading, down 0.36%. New York-traded oil futures hit a session low of $101.71 a barrel and a high of $102.95 a barrel.

The April contract settled down 0.09% at $102.75 a barrel on Thursday.

Nymex oil futures were likely to find support at $101.71 a barrel, the earlier low, and resistance at $103.28 a barrel, Wednesday's high.

While poor weather played a factor, the data sent oil prices falling on concerns economic headwinds will cool demand for fuel and energy even if prompted by weather.

Forecasts for a thawing trend to settle over the blizzard-weary eastern U.S. softened prices as well, though longer-range forecasts calling for a return of cold air next week cushioned losses as did protests and political instability Libya, South Sudan and Venezuela.

Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for April delivery were down 0.35% and trading at US$109.92 a barrel, while the spread between the Brent and U.S. crude contracts stood at US$7.54 a barrel.

Natural Gas

Natural gas futures rose on Friday after updated weather forecasting models called for a blast of bitter cold temperatures to pummel the northern U.S., though uncertainty as to how long the cold snap may last as well as how far south it dips capped gains.

On the New York Mercantile Exchange, natural gas futures for delivery in March traded at $6.094 per million British thermal units during U.S. trading, up 0.49%. The commodity hit session high of $6.303 and a low of $5.885.

The March contract settled down 1.38% on Thursday to end at $6.064 per million British thermal units.

Natural gas futures were likely to find support at $5.372 per million British thermal units, Monday's low, and resistance at $6.378, Thursday's high.

A powerful blast of cold air is expected to shoot across the northern U.S. states on Tuesday through Thursday, reported, which will increase demand for natural gas as businesses and homes crank up the heat.

Still, uncertainty as to how long the system may stick around as well as how far south it dips capped the commodity's gains, even sending it into negative territory at times.

A lackluster weekly inventory report released Thursday capped gains as well.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended February 14 fell by 250 billion cubic feet, compared to expectations for a decline of 251 billion cubic feet.

The number sparked profit taking, especially among investors speculating for a more bullish stockpile report.

Natural gas supplies fell by 127 billion cubic feet in the same week a year earlier.

Total U.S. natural gas storage stood at 1.443 trillion cubic feet. Stocks were 975 billion cubic feet less than last year at this time and 741 billion cubic feet below the five-year average of 2.184 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 364 billion cubic feet below the five-year average, following net withdrawals of 129 billion cubic feet.

Stocks in the Producing Region were 277 billion cubic feet below the five-year average of 806 billion cubic feet after a net withdrawal of 91 billion cubic feet.

Stockpiles of the fuel are likely to finish below 1 trillion cubic feet by the last week of March, the formal end of the winter heating season, for the first time since 2003.

Natural gas inventories have fallen sharply since November as frigid temperatures and heavy winter snow in the U.S. led households to demand a higher than normal amount of the fuel in furnaces to heat their homes.

The heating season from November through March is the peak demand period for U.S. gas consumption. Approximately 52% of U.S. households use natural gas for heating, according to the Energy Department.

Elsewhere on the NYMEX, light sweet crude oil futures for delivery in April were down 0.39% and trading at $102.35 a barrel, while heating oil for March delivery were down 2.07% and trading at $3.1120 per gallon.

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