Weekly Wrap-Up 05 September 2014

September 5th, 2014
in contributors, syndication, forex

U.S. stocks shrug off jobs report, post solid gains; Dow rises 0.40%

by Staff,

U.S. stocks ignored a disappointing August jobs report and rallied on Friday as investors bet that recent weeks of positive data suggest that the unemployment numbers were likely an anomaly.

At the close of U.S. trading, the Dow 30 rose 0.40%, the S&P 500index rose 0.50%, while the NASDAQ Composite index rose 0.45%.

The Volatility S&P 500 index, which measures the outlook for market volatility, was down 4.67% at 12.05.

Follow up:

The Department of Labor reported earlier that the U.S. economy added 142,000 jobs in August, far less than the expected increase of 225,000. July's figure was revised to a 212,000 increase from a previously estimated rise of 209,000.

The report also showed that the U.S. unemployment rate ticked down to 6.1% in August from 6.2% in July, in line with expectations.

The data came a day after payroll processor ADP reported that its nonfarm payrolls report showed that the private sector added 204,000 jobs in August, missing expectations for jobs growth of 220,000 though still above the 200,000 mark.

Stocks shrugged off the data and rose, as the August jobs report tends to be subject to hefty revisions later in the year.

Federal Reserve Chair Janet Yellen has said that slackness persists in the labor market despite an improving economy, which also fueled the rally by creating a scenario that borrowing costs will remain low while the economy continues to improve.

Factory and service-sector gauges, economic growth reports and other indicators have come in better than expected in recent weeks, giving investors room to largely ignore Friday's jobs report.

Leading Dow Jones Industrial Average performers included Nike Inc (XETRA:NKE), up 2.67%, Home Depot Inc (NYSE:HD), up 1.86%, and Merck & Company Inc (NYSE:MRK), up 1.77%.

The Dow Jones Industrial Average's worst performers included Boeing Company (NYSE:BA), down 0.61%, United Technologies Corporation (NYSE:UTX), down 0.48%, and Caterpillar Inc (NYSE:CAT), down 0.25%.

European indices, meanwhile, ended the day largely lower.

After the close of European trade, the DJ Euro Stoxx 50 fell 0.04%, France's CAC 40 fell 0.19%, while Germany's DAX rose 0.23%. Meanwhile, in the U.K. the FTSE 100 fell 0.33%.


In U.S. trading on Friday, EUR/USD was up 0.07% at 1.2954.

The U.S. employment data, weaker than expected, was a drag on the U.S. dollar. Still, the dollar didn't plummet on the news, as the August jobs report tends to be subject to hefty revisions later in the year.

Still, Federal Reserve Chair Janet Yellen has said that slackness persists in the labor market despite an improving economy, which softened demand for the greenback.

Meanwhile in Europe, official data revealed that German industrial production rose 1.9% in July, beating expectations for an uptick of 0.3%, after a revised 0.4% increase in June.

Still, the euro continued to come under pressure in wake of a European Central Bank decision to trim its benchmark interest rate to a record-low 0.05% from 0.15% on Thursday.

The central bank also lowered its deposit facility rate to -0.20% from -0.10% previously and its marginal lending rate to 0.30% from 0.40%.

The European monetary authority will also begin an asset-backed securities purchasing program to shore up the recovery and steer the continent away from deflationary decline.

The ECB cut its forecast for growth this year to 0.9% down from 1.0% previously and cut the forecast for 2015 to 1.6% from 1.7%. The bank also lowered its inflation forecast for this year to 0.6% from 0.7% in June.

The dollar was down against the yen, with USD/JPY down 0.18% at 105.07, and down against the Swiss franc, with USD/CHF down 0.08% at 0.9311.

The greenback was flat against the pound, with GBP/USD down 0.01% at 1.6327.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.08% at 1.0883, AUD/USD up 0.30% at 0.9376 and NZD/USD up 0.29% at 0.8330.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.05% at 83.77.

Commitments of Traders data from the CFTC (Commodity Future Trading Commission) - As it has for several weeks, bearish sentiment increased for the euro and Japanese yen. Mild bullishness for the British pound weakened. Bullishness increased modestly for the Mexican peso, the Australian dollar and the Canadian dollar. The sentiment for all other currencies tracked were little changed from a week ago. All sentiment is relative to the U.S. dollar.



Gold prices moved higher on Friday after a disappointing U.S. August jobs report stoked concerns that a still soft labor market may prompt the Federal Reserve to raise interest rates later in 2015 than markets were anticipating.

Still, gold didn't soar on the employment data, as the August jobs report tends to be subject to hefty revisions.

Meanwhile, silver for December delivery was up 0.16% at $19.168 a troy ounce, while copper futures for December delivery were up 0.53% at $3.168 a pound.


Oil prices fell on Friday after a disappointing jobs report stoked concerns that the U.S. economy still battles headwinds and may consume less energy and fuel going forward than once anticipated, especially at a time when global supply remains ample.

In the New York Mercantile Exchange, West Texas Intermediate crude oil for delivery in October traded down 0.95% at $93.55 a barrel during U.S. trading. New York-traded oil futures hit a session low of $92.89 a barrel and a high of $94.99 a barrel.

The October contract settled down 1.14% at $94.45 a barrel on Thursday.

Nymex oil futures were likely to find support at $92.68 a barrel, Tuesday's low, and resistance at $96.00 a barrel, the high from Aug. 29.

The Department of Labor reported earlier that the U.S. economy added 142,000 jobs in August, far less than the expected increase of 225,000. July's figure was revised to a 212,000 increase from a previously estimated rise of 209,000.

On Thursday, data revealed that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) dropped by 0.9 million barrels in the week ending Aug. 29 from the previous week, less than market forecasts for a decline of 1.1 million barrels.

At 359.6 million barrels, U.S. crude oil inventories are in the upper half of the average range for this time of year, the Energy Information Administration said in a report.

Total motor gasoline inventories fell by 2.3 million barrels last week compared to market calls for a decline of 1.3 million barrels.

Distillate fuel inventories increased by 0.6 million barrels last week, confounding market calls for a draw of 0.5 million barrels, which also helped tip crude prices downward.

Separately, on the ICE Futures Exchange in London, Brent oil futures for October delivery were down 0.96% at US$100.86 a barrel, while the spread between Brent and U.S. crude contracts stood at US$7.31 a barrel.

Natural Gas

Natural gas prices edged lower on Friday after weather-forecasting models called for below-normal temperatures to trek across the U.S. next week.

On the New York Mercantile Exchange, natural gas futures for delivery in October were down 0.82% at $3.788 per million British thermal units during U.S. trading. The commodity hit a session low of $3.785, and a high of $3.846.

The October contract settled down 0.73% on Thursday to end at $3.819 per million British thermal units.

Natural gas futures were likely to find support at $3.732 per million British thermal units, the low from Aug. 17, and resistance at $4.078, Tuesday's high.

Cooler temperature will make their arrival over parts of the U.S. in the coming days and likely curb demand for air conditioning, prompting thermal power plants to burn less of the commodity due to reduced demand.

A fast moving cool front will track across the southern and eastern U.S. over the next several days and bring showers, thunderstorms, and much more comfortable temperatures, reported in its daily weather forecast for the Sept. 5-11 period.

While warmer weather will remain over parts of the southern and western U.S., changes may be in store.

"Late next week a strong and unseasonably cold Canadian weather system will be tracking out of the northern Rockies and deep into the central US.," reported.

In its Sept. 12-18 forecast, reported that a strong Canadian weather system will dive deep into the central and eastern U.S. during the first half of the outlook with much cooler than normal temperatures setting up over many regions.

"This will even drive some demand for heating over the Midwest and portions of the Northeast. However, it will also bring very pleasant temperatures with highs only in the upper 70s and 80s deep into the southern U.S., which will lead to lower than normal cooling demand," reported.

"A very pleasant pattern will follow for much of the U.S. September 15-18th , apart from the West which will remain warmer than normal, including California, as high pressure dominates."

Investors continued to digest Thursday's inventory data.

The Energy Information Administration reported earlier that U.S. natural gas storage rose by 79 billion cubic feet in the week ending Aug. 29 from 75 billion cubic feet in the preceding month.

Analysts were expected a build of 73 billion cubic feet, and the greater-than-expected figure softened natural gas prices.


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