Investing.com Weekly Wrap-Up 03 April 2015

April 3rd, 2015
in contributors, syndication, forex

Shares in Asia trend higher after tentative deal on Iran nuclear program

by Investing.com Staff, Investing.com

Shares in Tokyo and Shanghai edged higher on Friday in holiday-thinned trade globally with investors focused on a tentative deal on Iran's nuclear program and U.S. jobs data. The Nikkei 225 gained 0.42% at the break, while the Shanghai Composite rose 0.52%.

U.S. and European markets were closed for Good Friday.  U.S. stocks were higher after the close on Thursday, as gains in the Telecoms, Consumer Services and Consumer Goods sectors led shares higher.

Follow up:

At the Thursday close in New York, the Dow Jones Industrial Average rose 0.37%, while theS&P 500 index gained 0.35%, and the NASDAQ Composite index gained 0.14%.

On late Thursday, details emerged that Iran and Western powers had reached a deal on the framework of a preliminary Iranian nuclear pact before a final agreement could be reached in late-June. U.S. president Barack Obama said at a news conference outside the White House:

"This framework would cut off the pathway Iran could take to develop a nuclear weapon. This deal is not based on trust, it is based on unprecedented verification."

It is believed that the severe economic and financial sanctions against the Persian Gulf nation will be lifted on a staggered, step-by-step basis depending on how cooperative it is with inspectors from the International Atomic Energy Agency. Sanctions that have limited the Iranian Banking System will be among the limitations that could be initially removed, NBC News reported. EU Vice President Federica Mogherini said at a joint news conference with Iran:

"The European Union will terminate the implementation of all economic and financial sanction and the U.S. will cease the application of all economic and financial sanctions."

Investors also focused on Friday's U.S. employment report, which was forecast to show a gain of 245,000 jobs in March, following an increase of 295,000 in February. When the number reported was much weaker, only 126,000, Reuters reported that U.S. stock futures fell sharply, providing a very bearish outlook for next week.

The U.S. Department of Labor said earlier that the number of individuals filing for initial jobless benefits declined by 20,000 last week to 268,000 from the previous week's total of 288,000. Analysts had expected initial jobless claims to fall by 3,000 to 285,000 last week.

A separate report showed that the U.S. trade deficit widened narrowed 16.9% in February to $34.44 billion, the lowest level since 2009.

On Wednesday, payroll processing firm ADP said non-farm private employment rose by 189,000 last month, below expectations for an increase of 225,000 and the lowest since January 2014.

The disappointing data fuelled concerns over the health of the U.S. economy and dampened expectations for higher interest rates.

Forex

The dollar edged mostly higher in Asia on Friday in holiday-thinned trade with the Iran nuclear deal and U.S. jobs data dominating investor views.

EUR/USD traded at 1.0869, down 0.11%, while AUD/USD changed hands at 0.7578, down 0.18% and USD/JPY was nearly steady at 119.71, down 0.01%.

The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, rose 0.05% to 97.83.

Overnight, the dollar extended losses even after data showed that the number of U.S. jobless claims fell to a nine-week low last week and that the U.S. trade deficit narrowed to the lowest level since 2009 in February.

It remained relatively unchanged after Iran reached a solution on key parameters of a nuclear deal with Western leaders.

Elsewhere, Reuters reported that Greece told its creditors on Wednesday that it could run out of money on April 9. On that date, Greece owes a €450 million payment to the International Monetary Fund (IMF). Greece could meet its obligation to the IMF or repay government salaries and pensions, but might be unable to do both.

CTFC Commitment of Traders

Speculators were more bearish on the euro and less bearish on the S&P 500 this week. Bearishness decreased on the Mexican peso but sentiment was little changed for all other trades listed below.

cot.2015.mar.25

Gold

Gold price rose slightly in Asia on Friday as investors braced for a U.S. jobs report expected to set the timing for the Federal Reserve to hike interest rates this year as widely expected, while news of a nuclear deal with Iran was being assessed.

On the Comex division of the New York Mercantile Exchange, gold futures for June delivery rose 0.07% to $1,202.60 after dropping as low as $1,195.80 following the disappointing U.S. employment report.

Elsewhere, silver for May delivery gained 0.05% $16.748 a troy ounce, while copper for May delivery inched up 0.04% to trade at $2.733 a pound.

U.S. markets were shut on Friday.

Overnight, gold fell after data showed that the number of U.S. jobless claims fell to a nine-week low last week and that the U.S. trade deficit narrowed to the lowest level since 2009 in February.

It remained relatively unchanged after Iran reached a solution on key parameters of a nuclear deal with Western leaders, until registering the small drop and subsequent recovery after the U.S. employment report.

Oil

Crude oil prices rose in Asia on Friday even as the prospect of more oil from Iran hitting the market appeared likely after Western powers negotiated a tentative nuclear deal with Tehran.

On the New York Mercantile Exchange, crude oil for May delivery rose 0.24% to trade at $49.53 a barrel.

Trade was thin on holidays in many markets, including the U.S., but non-farm payroll data will be released.

Overnight, oil futures tumbled on Thursday, as investors looked awaited the outcome of discussions between western diplomats and Iran over Teheran's disputed nuclear program.

On late Thursday, details emerged that Iran and Western powers had reached a deal on the framework of a preliminary Iranian nuclear pact before a final agreement could be reached in late-June.

It is believed that the severe economic and financial sanctions against the Persian Gulf nation will be lifted on a staggered, step-by-step basis depending on how cooperative it is with inspectors from the International Atomic Energy Agency. Sanctions that have limited the Iranian Banking System will be among the limitations that could be initially removed, NBC News reported.

On the ICE Futures Exchange in London, Brent oil for May delivery slumped $1.52, or 2.67%, to trade at $55.58 a barrel on Thursday.

The U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories rose by 4.8 million barrels in the week ended March 27, below the 5.2 million barrel build reported by the American Petroleum Institute.

The data showed that U.S. crude output declined for the first time since late-December, fuelling speculation that an ongoing collapse in rigs drilling for oil will finally result in lower production.

According to industry research group Baker Hughes (NYSE:NYSE:BHI), the number of rigs drilling for oil in the U.S. stood at 813 last week, the lowest since March 2011.

Market players have been paying close attention to the shrinking rig count in recent months for signs it will eventually reduce the glut of crude flowing into the market.

Oil prices have fallen sharply in recent months as the Organization of Petroleum Exporting Countries resisted calls to cut output, while the U.S. pumped at the fastest pace in more than three decades, creating a glut in global supplies.

Investors focused on Friday's U.S. employment report, which reported a gain of only 126,000 jobs in March, following an increase of 295,000 in February.

The U.S. Department of Labor said earlier that the number of individuals filing for initial jobless benefits declined by 20,000 last week to 268,000 from the previous week's total of 288,000. Analysts had expected initial jobless claims to fall by 3,000 to 285,000 last week.

A separate report showed that the U.S. trade deficit widened narrowed 16.9% in February to $34.44 billion, the lowest level since 2009.

On Wednesday, payroll processing firm ADP said non-farm private employment rose by 189,000 last month, below expectations for an increase of 225,000 and the lowest since January 2014.

The disappointing data fuelled concerns over the health of the U.S. economy and dampened expectations for higher interest rates.

Natural Gas (Thursday Report)

Natural gas futures extended gains on Thursday, after data showed that U.S. natural gas supplies fell more than expected last week.

On the New York Mercantile Exchange, natural gas for delivery in May jumped 7.3 cents, or 2.82%, to trade at $2.679 per million British thermal units during U.S. morning hours. Prices were at around $2.629 prior to the release of the supply data.

Futures were likely to find support at $2.583, the low from April 1, and resistance at $2.697, the high from March 27.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended March 27 fell by 18 billion cubic feet, compared to expectations for a decline of 10 billion and following a 12 billion cubic feet rise in the preceding week.

Supplies fell by 71 billion cubic feet in the same week last year, while the five-year average change is a decline of 22 billion cubic feet.

Total U.S. natural gas storage stood at 1.461 trillion cubic feet as of last week. Stocks were 628 billion cubic feet higher than last year at this time and 190 billion cubic feet below the five-year average of 1.651 trillion cubic feet for this time of year.

A day earlier, natural gas prices fell to $2.583, the lowest level since September 2012, before ending at $2.605, down 3.5 cents, or 1.33%.

Updated weather forecasting models showed that colder temperatures will impact the U.S. east coast from April 4 to April 6, while the rest of the country will enjoy seasonal or higher temperatures.

Prices are likely to remain vulnerable in the near-term as the coldest part of the winter has effectively passed and below-normal temperatures in March and April mean less than they do in January and February.

Spring usually sees the weakest demand for natural gas in the U.S, as the absence of extreme temperatures curbs demand for heating and air conditioning.

The heating season from November through March is the peak demand period for U.S. gas consumption.

Approximately 49% of U.S. households use natural gas for heating, according to the Energy Department.









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