Weekly Wrap-Up 15 August 2014

August 15th, 2014
in contributors, syndication, forex

U.S. stocks mixed on fresh Ukraine tensions; Dow falls 0.30%

by Staff,

U.S. stocks finished Friday mixed after a fresh flare up in the Russia-Ukraine conflict spooked investors, though bottom fishing took equities indices off earlier lows.

At the close of U.S. trading, the Dow 30 fell 0.30%, the S&P 500index fell 0.01%, while the NASDAQ Composite index rose 0.27%.

The Volatility S&P 500 index, which measures the outlook for market volatility, was up 5.88% at 13.15.

Follow up:

Events unfolding in Ukraine sent stocks falling hard earlier Friday.

Ukrainian said its artillery destroyed a portion of a Russian column of armored vehicles inside Ukraine, which rattled nerves in markets globally.

Russia said the reports were untrue, denying that armored vehicles were in Ukraine, which allowed stocks to come off earlier lows in a session that saw hefty swings due uncertainty and in part to low trading volumes.

Mixed data kept stocks prices largely in negative territory, though bottom fishing brought tech stocks in particular back into positive territory.

The preliminary Thomson Reuters/University of Michigan consumer sentiment index ticked down to a nine-month low of 79.2 in August from 81.8 in July. Analysts had expected the index to rise to 82.5 this month.

Separately, the New York Federal Reserve said that its Empire State manufacturing index fell to a four-month low of 14.69 this month from 25.60 in July, worse than expectations for a decline to 20.0.

Data also showed that U.S. producer price inflation rose 0.1% on year last month, in line with expectations, after a 0.4% increase in June.

Core producer price inflation, which excludes food, energy and trade, rose 0.2% in July, in line with market projections, and after a 0.2% gain the previous month.

A separate report showed that U.S. industrial production rose 0.4% in July, beating expectations for a 0.3% gain.

Leading Dow Jones Industrial Average performers included Coca-Cola Company (NYSE:KO), up 1.75%, Microsoft Corporation (NASDAQ:MSFT), up 1.21%, and Walt Disney Company (NYSE:DIS), up 0.76%.

The Dow Jones Industrial Average's worst performers included Visa Inc (NYSE:V), down 1.08%, General Electric Company (NYSE:GE), down 0.99%, and Johnson & Johnson (NYSE:JNJ), down 0.83%.

European indices, meanwhile, ended the day largely lower.

After the close of European trade, the DJ Euro Stoxx 50 fell 0.97%, France's CAC 40 fell 0.74%, while Germany's DAX fell 1.44%. Meanwhile, in the U.K. the FTSE 100 rose 0.06%.


The dollar traded largely lower against most major currencies on Friday, as a mixed bag of data coupled with a fresh flare up in the Russia-Ukraine conflict stoked concerns the U.S. economy still faces headwinds as it recovers.

In U.S. trading on Friday, EUR/USD was up 0.24% at 1.3398.

A double-shot of mixed data and geopolitical concerns took its toll on the dollar on Friday.

The day's data fueled ongoing uncertainty as to how much time will pass from when the Federal Reserve closes its monthly bond-buying stimulus program and when it begins hiking interest rates.

News that Ukrainian troops destroyed a portion of a Russian column of armored vehicles inside Ukraine rattled nerves on Wall Street, which kept the greenback in negative territory versus the single territory.

Russia said the reports were untrue, denying that armored vehicles were in Ukraine, though fears tensions are on the rise steered investors away from the U.S. currency, which tends to suffer from concerns that geopolitical tensions will dampen U.S. recovery.

The dollar was down against the yen, with USD/JPY down 0.12% at 102.33, and down against the Swiss franc, with USD/CHF down 0.44% at 0.9026.

The greenback was down against the pound, with GBP/USD up 0.07% at 1.6698.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.12% at 1.0890, AUD/USD up 0.06% at 0.9325 and NZD/USD down 0.05% at 0.8488.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.20% at 81.47.

Commitments of Traders data from the CFTC (Commodity Future Trading Commission) Bearish sentiment continued but was slightly weaker for the euro and Japanese yen; bullishness strengthened slightly for the UK pound. Bullishness totally collapsed to zeroe for the Mexican peso. The sentiment for all other currencies weakened slightly from a week earlier except for the Swiss franc which strengthened slightly. All sentiment is relative to the U.S. dollar.



Gold prices fell on Friday due to weak demand in Asia, though escalating tensions in Ukraine brought the yellow metal off session lows.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at 1,304.70 a troy ounce during U.S. trading, down 0.84%, up from a session low of $1,293.80 and off a high of $1,316.40.

The December contract settled up 0.09% at $1,315.70 on Thursday.

Futures were likely to find support at $1,283.30 a troy ounce, the low from Aug. 5, and resistance at $1,321.80, Thursday's high.

Gold prices fell on Friday as soft demand for spot gold in India and China offset news of fresh military conflicts in Ukraine.

Gold has served as a hedge to geopolitical pressures in recent sessions, though weak Asian demand kept the precious metal in negative territory despite soft data in the U.S., which normally supports the asset.

Meanwhile, silver for September delivery was down 1.89% at $19.530 a troy ounce, while copper futures for September delivery were up 0.49% at $3.106 a pound.


Oil prices spiked on Friday on news of escalating tensions in Ukraine, which offset a mixed bag of data out of the U.S.

In the New York Mercantile Exchange, West Texas Intermediate crude oil for delivery in September traded up 1.43% at $96.95 a barrel during U.S. trading. New York-traded oil futures hit a session low of $95.33 a barrel and a high of $97.16 a barrel.

The September contract settled down 2.06% at $95.58 a barrel on Thursday.

Nymex oil futures were likely to find support at $95.26 a barrel, Thursday's low, and resistance at $98.58 a barrel, Monday's high.

News that Ukrainian troops destroyed a portion of a Russian column of armored vehicles inside Ukraine sent oil prices spiking on fears the conflict will escalate and disrupt crude shipments out of Russia.

Geopolitical events in Eastern Europe offset otherwise bearish data out of the U.S.Separately, on the ICE Futures Exchange in London, Brent oil futures for October delivery were up 1.10% and trading at US$103.20 a barrel, while the spread between the Brent and U.S. crude contracts stood at US$6.25 a barrel.

Natural Gas

Profit taking sent natural gas futures falling on Friday, fueled by weather reports calling for a break in a U.S. heat wave.

On the New York Mercantile Exchange, natural gas futures for delivery in September traded at $3.771 per million British thermal units during U.S. trading, down 3.46%. The commodity hit a session low of $3.765, and a high of $3.901.

The September contract settled up 1.96% on Thursday to end at $3.906 per million British thermal units.

Natural gas futures were likely to find support at $3.725 per million British thermal units, the low from July 28, and resistance at $4.020, Tuesday's high.

Above-normal temperatures should push out of portions of the Midwest and eastern U.S. and leave room for milder mercury readings, which sent natural gas prices falling on Friday.

Milder temperatures cut into the need for natural gas this time of year, as households and businesses throttle back on their air conditioning.

Investors continued to digest Thursday's supply report.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ending Aug. 8 rose by 78 billion cubic feet, below expectations for an increase of 83 billion cubic feet.

Inventories rose by 70 billion cubic feet in the same week a year earlier, while the five-year average change is a build of 45 billion cubic feet.

Injections of gas into storage have surpassed the five-year average for 17 consecutive weeks, alleviating concerns over tightening supplies.

Total U.S. natural gas storage stood at 2.467 trillion cubic feet. Stocks were 530 billion cubic feet less than last year at this time and 575 billion cubic feet below the five-year average of 3.042 trillion cubic feet for this time of year.


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