Investing.com Weekly Wrap-Up 21 March 2014

March 21st, 2014
in contributors, syndication

U.S. stocks edge lower on Ukraine concerns; Dow slips 0.17%

by Investing.com Staff, Investing.com

investing.com-logoU.S. stocks edged lower on Friday after the West slapped fresh sanctions on Russia and brewed fears a diplomatic solution to the standoff may be farther off on the horizon. 

At the close of U.S. trading, the Dow Jones Industrial Average fell 0.17%, the S&P 500 index fell 0.30%, while the Nasdaq Composite index fell 0.98%. 

Follow up:

The European Union and the U.S. intensified sanctions against Russian President Vladimir Putin and his allies to pressure his government to defuse the global standoff over Ukraine.

Western nations added new names to their lists of Russians and Ukrainians punished with asset freezes and travel bans.

Russia followed suit with similar sanctions, and while viewed by markets as a tit-for-tat measure, stock prices fell on concerns diplomatic efforts to diffuse the crisis may be unraveling.

Russia earlier Friday completed its annexation of Crimea, which voted last week to join its eastern neighbor and break ties with Ukraine.

Elsewhere, expectations for the Federal Reserve to continue tapering monthly bond purchases, currently at $55 billion a month, edged stocks lower as well.

Fed Chair Janet Yellen said earlier this week that interest rates will rise around six months after the bond-buying program closes, which markets view as sometime this fall.

Fed asset purchases aim to stimulate the economy by suppressing interest rates to send stocks rising in hopes investing and hiring follow suit.

Leading Dow Jones Industrial Average performers included Wal-Mart Stores, up 1.45%, Caterpillar, up 1.19%, and Johnson & Johnson, up 0.76%.

The Dow Jones Industrial Average's worst performers included Nike, down 5.12%, Merck, down 1.54%, and Goldman Sachs, down 1.34%.

European indices, meanwhile, finished higher.

After the close of European trade, the EURO STOXX 50 rose 0.41%, France's CAC 40 rose 0.17%, while Germany's DAX 30 rose 0.50%. Meanwhile, in the U.K. the FTSE 100 rose 0.23%.

Forex

The dollar moved lower against most major currencies due to profit taking on Friday, though ongoing expectations for the Federal Reserve to continue signaling when interest rates may rise trimmed earlier losses.

In U.S. trading on Friday,EUR/USD was up 0.14% at 1.3797.

The U.S. currency shot up this week after Federal Reserve Chair Janet Yellen suggested at a Wednesday press conference that interest rates could rise six months after the Fed's bond-buying program ends, which is widely seen taking place this fall.

Fed asset purchases, currently set at $55 billion a month, aim to stimulate the economy by suppressing interest rates, weakening the dollar as long as they remain in effect, and Yellen's comments left many expecting benchmark interest rates to begin rising around the first half of 2015.

Profit-taking sent the dollar falling on Friday.

However, giving the greenback some support were comments made by Federal Reserve Bank of St. Louis President James Bullard, who told reporters earlier that Yellen's six-month space between the end of bond purchases and tighter monetary policy matched private-sector expectations.

"On the 'considerable period' being six months, the surveys that I had seen from the private sector had that kind of number penciled in,'' St Louis Federal Reserve President James Bullard said during a lunch with journalists, according to Reuters.

"That wasn't very different from what we had heard from financial markets. So, I just think she's just repeating that.''

Elsewhere on Friday, Fitch Ratings affirmed U.S. long-term foreign and local currency credit ratings at AAA with a stable outlook, taking the country off negative ratings watch.

Meanwhile in Europe, data revealed that consumer confidence within the euro zone fell less than expected last month.

The European Commission reported earlier that its euro zone consumer confidence index fell to -9.3 in March from -12.7 in the preceding month.

Analysts had expected the index to fall -12.4 last month.

Separately, data revealed that the euro zone's current account surplus expanded unexpectedly in January.

The European Central Bank reported earlier that the euro zone current surplus account widened to €25.3 billion in January from €20.0 billion in December.

Analysts were expecting the current account surplus to narrow to €18.4B in January.

The dollar was down against the yen, with USD/JPY down 0.26% at 102.13, and down against the Swiss franc, with USD/CHF down 0.20% at 0.8820.

The greenback was up against the pound, with GBP/USD down 0.05% at 1.6497.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.30% at 1.1208, AUD/USD down 0.31% at 1.1207 and NZD/USD up 0.05% at 0.8538.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.14% at 80.23.

GOLD

Gold prices gained as the dollar edged lower on Friday after markets priced in Federal Reserve Chair Janet Yellen's Wednesday comments suggesting interest rate hikes may come around the first half of next year.

Gold and the dollar tend to trade inversely with one another.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at $1,335.60 a troy ounce during U.S. trading, up 0.38%, up from a session low of $1,327.80 and off a high of $1,343.00.

The April contract settled down 0.81% at $1,330.50 on Thursday.

Futures were likely to find support at $1,321.10 a troy ounce, Thursday's low, and resistance at $1,393.80, the high from Sept. 8.

The dollar posted strong gains this week after Federal Reserve Chair Janet Yellen suggested at a Wednesday press conference that interest rates could rise six months after the Fed's bond-buying program ends, which is widely seen taking place this fall.

Fed asset purchases, currently set at $55 billion a month, aim to stimulate the economy by suppressing interest rates, weakening the dollar as long as they remain in effect, and Yellen's comments left many expecting benchmark interest rates to begin rising around the first half of 2015.

Profit-taking sent the dollar falling on Friday, while bottom fishing sent gold prices rising, after investors priced in the likelihood that years of ultra-loose monetary policy may be coming to an end in 2015 and looked ahead for fresh market steering currents.

Elsewhere on Friday, Fitch Ratings affirmed U.S. long-term foreign and local currency credit ratings at AAA with a stable outlook, taking the country off negative ratings watch.

Meanwhile, silver for May delivery was down 0.70% at US$20.288 a troy ounce, while copper futures for May delivery were up 0.67% at US$2.948 a pound.

Oil

Crude prices firmed on Friday after the West slapped fresh sanctions on Russia for annexing Crimea, which sparked fears escalating geopolitical tensions may threaten Russian oil exports.

On the New York Mercantile Exchange, West Texas Intermediate crude for delivery in May traded at $99.87 a barrel during U.S. trading, up 0.98%. New York-traded oil futures hit a session low of $98.26 a barrel and a high of $100.25 a barrel.

The May contract settled down 0.27% at $98.90 a barrel on Thursday.

Nymex oil futures were likely to find support at $98.10 a barrel, Thursday's low, and resistance at $102.89 a barrel, the high from March 7.

The European Union and the U.S. intensified sanctions against Russian President Vladimir Putin and his allies to pressure his government to defuse the global standoff over Ukraine.

Western nations added new names to their lists of Russians and Ukrainians punished with asset freezes and travel bans.

Russia followed suit with similar sanctions, and while viewed by markets as a tit-for-tat measure, oil prices rose on concerns diplomatic efforts to diffuse the crisis may be unraveling.

Elsewhere, bottom fishing sent oil prices rising as well, mainly after the U.S. dollar cooled its gains.

The dollar posted strong gains this week after Federal Reserve Chair Janet Yellen suggested at a Wednesday press conference that benchmark interest rates could rise six months after the Fed's bond-buying program ends, which is widely seen taking place this fall.

Fed asset purchases, currently set at $55 billion a month, aim to stimulate the economy by suppressing interest rates, weakening the dollar as long as they remain in effect, and Yellen's comments left many expecting benchmark interest rates to begin rising around the first half of 2015.

Profit-taking sent the dollar falling on Friday, which gave oil room to rise.

A weaker greenback often makes oil an attractive buy on dollar-denominated exchanges.

Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for May delivery were up 0.70% and trading at US$107.20 a barrel, while the spread between the Brent and U.S. crude contracts stood at US$7.33 a barrel.

Natural Gas

Natural gas futures carried Thursday's losses into Friday, as investors bet seasonably mild weather typical of this time of year will curb demand for both heating and air conditioning across much of the U.S.

Bearish supply data pushed prices lower as well.

On the New York Mercantile Exchange, natural gas futures for delivery in April traded at $4.332 per million British thermal units during U.S. trading, down 0.85%. The commodity hit session high of $4.376 and a low of $4.287.

The April contract settled down 2.56% on Thursday to end at $4.369 per million British thermal units.

Natural gas futures were likely to find support at $4.205 per million British thermal units, the low from Jan. 19, and resistance at $4.585, Monday's high.

Gas prices continued to fall on Friday after long-range weather forecasts calling for mild springtime temperatures fueled expectations for diminished demand for heating as well as air conditioning.

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.

A bearish weekly U.S. inventory report released Thursday continued to water down prices 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 March 14 fell by 48 billion cubic feet, compared to expectations for a decline of 59 billion cubic feet.

Supplies fell by 74 billion cubic feet in the same week a year earlier while the five-year average change for the week is a drop of 30 billion cubic feet.

Total U.S. natural gas storage stood at 953 billion cubic feet, the lowest for this time of year since 2004.

Stocks were 932 billion cubic feet less than last year at this time and 876 billion cubic feet below the five-year average of 1.829 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 399 billion cubic feet below the five-year average, following net withdrawals of 35 billion cubic feet.

Stocks in the Producing Region were 351 billion cubic feet below the five-year average of 742 billion cubic feet after a net withdrawal of 11 billion cubic feet.

 









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