Investing.com Weekly Wrap-Up 05 December 2014

December 5th, 2014
in contributors, syndication, forex

U.S. stocks rise on robust November jobs report; Dow gains 0.33%

by Investing.com Staff, Investing.com

U.S. stocks jumped up on Friday after official data revealed companies were adding payrolls at a much faster clip in November than markets were expecting.

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At the close of U.S. trading, the Dow 30 rose 0.33%, the S&P 500 index rose 0.17%, while the Nasdaq Composite index rose 0.24%.

The S&P 500 VIX index, which measures the outlook for market volatility, was down 4.52% at 11.82.

Follow up:

The Labor Department reported earlier that the U.S. economy added 321,000 jobs in November, well past expectations for a 225,000 reading. October's figure was revised up to 243,000 from a previously estimated 214,000, pointing to underlying strength in the labor market.

The U.S. unemployment rate remained unchanged at 5.8% last month, in line with expectations.

Stocks applauded the report on hopes that a more robust U.S. economy will boost top and bottom lines going forward, while falling gasoline prices added to gains on hopes that newly-hired Americans paying less at the pump will spend more on holiday shopping.

A separate report showed that the U.S. trade deficit hit $43.40 billion in October, down from $43.60 billion in September, whose figure was revised from a previously estimated deficit of $43.00 billion. Analysts had expected the trade deficit to narrow to $41.20 billion in October.

Data also showed that U.S. factory orders fell 0.7% in October compared to expectations for a 0.2% contraction. Factory orders in September were revised to a 0.5% decline from a previously estimated 0.6% fall.

Leading Dow Jones Industrial Average performers included JPMorgan Chase & Co(NYSE:JPM), up 2.15%, Goldman Sachs Group Inc (NYSE:GS), up 1.82%, and PfizerInc (NYSE:PFE), up 1.01%.

The Dow Jones Industrial Average's worst performers included Chevron Corporation (NYSE:CVX), down 1.26%, Cisco Systems Inc (NASDAQ:CSCO), down 0.97%, andCaterpillar Inc (NYSE:CAT), down 0.89%.

European indices, meanwhile, ended the day higher.

After the close of European trade, the Euro Stoxx 50 rose 2.70%, France's CAC 40 rose 2.21%, while Germany's DAX 30 rose 2.39%. Meanwhile, in the U.K. the FTSE 100rose 0.95%.

Forex

The dollar firmed against most major currencies on Friday after official data revealed the U.S. economy added way more payrolls in November than investors were expecting.

In U.S. trading on Friday, EUR/USD was up 0.72% at 1.2289.

The Labor Department reported earlier that the U.S. economy added 321,000 jobs in November, well past expectations for a 225,000 reading. October's figure was revised up to 243,000 from a previously estimated 214,000, pointing to underlying strength in the labor market.

The U.S. unemployment rate remained unchanged at 5.8% last month, in line with expectations, and the numbers fueled expectations that the Federal Reserve will raise interest rates in 2015, possibly earlier than once anticipated.

In the euro zone, official data earlier showed that German factory orders rose 2.5% in October, exceeding expectations for a 0.6% gain. Factory orders in September were revised to an increase of 1.1% from a previously estimated 0.8% rise.

The single currency had strengthened broadly on Thursday after European Central Bank President Mario Draghi indicated that the bank would not embark on quantitative easing for now, saying the bank would reassess its stimulus program in the first quarter of 2015.

The dollar was up against the yen, with USD/JPY up 1.37% at 121.43, and down against the Swiss franc, with USD/CHF up 0.71% at 0.9783.

The yen remained under pressure after Japanese media outlets reported on Thursday that Prime Minister Shinzo Abe's coalition government could retain its majority in the lower house of parliament in elections due to be held on December 14.

The greenback was up against the pound, with GBP/USD down 0.62% at 1.5576.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.43% at 1.1434, AUD/USD down 0.67% at 0.8328 and NZD/USD down 0.89% at 0.7712.

The US dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.79% at 89.36.

Commitment of Traders

Sentiment for most currencies remained bearish as the U.S. dollar showed continued strength this week. The euro and the yen had the most negative sentiment. Sentiment became more positive for the S&P 500, gold and silver, but copper slipped to a more negative position.

cot-2014-dec-05

Gold

Gold futures dropped on Friday after official data revealing a healthy uptick in U.S. hiring bolstered demand for the dollar, which trades inversely with the yellow metal.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery were down 1.35% at $1,191.40, up from a session low of $1,186.80 and off a high of $1,207.70.

The February contract settled down 0.08% at $1,207.70 on Thursday.

Futures were likely to find support at $1,141.70 a troy ounce, Monday's low, and resistance at $1,215.00, Wednesday's high.

Elsewhere, silver for March delivery was down 1.64% at $16.303 a troy ounce, while copper futures for March delivery were down 0.20% at $2.909 a pound.

Oil

Crude futures shrugged off an upbeat U.S. jobs report and slid on Friday on news that Saudi Arabia trimmed the price of oil it exports to the U.S. and Asia.

In the New York Mercantile Exchange, West Texas Intermediate crude futures for delivery in January traded down 1.73% at $65.66 a barrel during U.S. trading, up from a session low of $65.19 a barrel and off a high of $66.86 a barrel.

The January contract settled down 0.85% at $66.81 a barrel on Thursday.

Support for the commodity was seen at $63.72 a barrel, Monday's low, and resistance at $73.56 a barrel, last Friday's high.

Saudi Arabia's state-run oil company on Thursday lowered official selling prices for its crude in January to the lowest in at least 14 years for buyers in the U.S. and Asia, a move that continued to push down prices on Friday.

The measure suggested that the kingdom is stepping up a battle for market share with cheaper U.S. shale oil after last week's OPEC decision to keep production quotas unchanged, giving oil prices room to slide lower.

Oil prices have taken a hit in recent months on supply concerns.

While OPEC has left price quotas unchanged, conflicts in the Mideast and Eastern Europe have not affected supply as once feared, while cooling economies in Europe and Asia have stoked concerns that global supply is outstripping demand.

Upbeat U.S. data failed to boost oil prices by not stoking hopes consumption of energy and fuel will rise in the world's now second-largest economy following China.

Strong U.S. employment data fueled demand for the dollar, which helped soften oil.

A stronger greenback tends to make oil a less attractive commodity on dollar-denominated exchanges, especially in the eyes of investors holding other currencies.

Separately, on the ICE Futures Exchange in London, Brent oil futures for January delivery were down 1.20% at US$68.81 a barrel, while the spread between Brent and U.S. crude contracts stood at $3.15.

Natural Gas

U.S. Natural gas futures rose on Friday after investors priced in losses stemming from mild U.S. temperatures and snapped up nicely-priced positions in the commodity.

Longer-range forecasts suggesting a return of colder weather supported the commodity as well.

On the New York Mercantile Exchange, natural gas futures for delivery in January were up 3.32% at $3.770 per million British thermal units during U.S. trading. The commodity hit a session low of $3.650, and a high of $3.822.

The January contract settled down 4.10% on Thursday to end at $3.649 per million British thermal units.

Natural gas futures were likely to find support at $3.638 per million British thermal units, Thursday's low, and resistance at $4.529, the high from Nov. 26.

Mild U.S. temperatures hovering over the U.S. have sent natural gas prices plunging in recent sessions by fueling concerns that households and businesses across the country have been scaling back on their heating.

By Friday, investors had felt the commodity had fallen far enough, with bottom fishers sending prices up into positive territory, especially after long-range computer models couldn't rule out a return of colder weather later in December.

Natgasweather.com reported in its Friday midday update:

"We still expect a few fairly cold weather systems next week that will track into the Midwest and Northeast with sub-freezing temperatures December 8-10th, and this has only been reinforced by the latest weather data and will result in a surge in heating demand."

While shots of warmer air will also trek across the country on the Pacific jet stream, through the middle of December, colder temperatures may make their return. Natgasweather.com added:

"This mild and moist U.S. pattern should last through around December 20th, or right up to the start of winter. There will be stronger potential for colder air to arrive after December 21st if the Pacific jet fizzles or shifts offshore and will need close monitoring."

Investors continued to digest Thursday's weekly U.S. supply report, which revealed that natural gas storage in the week ending Nov. 28 fell by 22 billion cubic feet, less than expectations for a decline of 41 billion and well below a drop of 162 billion in the week before.

The five-year average change for the week is a decrease of 50 billion cubic feet. Stockpiles fell by 141 billion in the same week a year earlier.

Total U.S. natural gas storage stood at 3.410 trillion cubic feet. Stocks were 227 billion cubic feet less than last year at this time and 372 billion cubic feet below the five-year average of 3.782 trillion cubic feet for this time of year.









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