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posted on 27 November 2015

Investing.com Weekly Wrap-up 27 November 2015

Written by , Investing.com

U.S. stocks mixed in light session, amid thin shopping on Black Friday

U.S. stocks were mixed in a lightly traded post-Thanksgiving session, as retail stocks remained flat during the official beginning of the Holiday shopping season.

Dragged down by sharp losses from Walt Disney Company (N:DIS), the Dow Jones Industrial Average lost 14.90 or 0.08% to 17,798.49. The S&P 500 Composite Index, meanwhile, gained 1.24 or 0.06% to 2,090.11, as seven of 10 sectors closed in the green. Stocks in the Telecommunications, Financials and Health Care sectors led, while stocks in the Energy, Consumer Services and Basic Materials industries lagged. The major indices remained near their highest closing level in three weeks.

Dragged down by sharp losses from Walt Disney Company (N:DIS), the Dow Jones Industrial Average lost 14.90 or 0.08% to 17,798.49. Disney, the worst performer on the Dow, fell 3.54 or 2.98% to 115.13 after ESPN announced that it has lost three million subscribers so far in 2015. The sell-off in Disney spilled over to other media stocks on the NASDAQ Composite index, as Viacom B Inc (O:VIAB) and Twenty-First Century Fox Inc (O:FOX) ended the session among the day's worst performers. The NASDAQ still managed to close up by 11.39 or 0.22% at 5,127.53, amid gains in semiconductors and other tech stocks.

The top performer on the Dow was Goldman Sachs Group Inc (N:GS), which rose 1.32 or 0.70% to 190.47. Shares in Goldman Sachs are virtually flat over the last 12 months. Disney finished just below Wal-Mart (N:WMT), which lost 0.35 or 0.58% to 60.67. The biggest gainer on the NASDAQ was NXP Semiconductors NV (O:NXPI), which jumped 3.88 or 4.59% to 88.36 in the wake of its settlement with the U.S. Federal Trade Commission on Wednesday. NXP's divestiture of its power amplifier assets to a Chinese private equity firms paves the way for its $11.8 billion merger with Freescale Semiconductor Ltd (N:FSL). The worst performer was VimpelCom (O:VIP), which fell 0.18 or 5.00% to 3.42 on Friday.

The top performer on the S&P 500 was Kroger Company (N:KR), which gained 0.84 or 2.26% to 38.01. Kroger (N:KR) shares have gained approximately 5% over the last two weeks since its $800 million acquisition of Roundy's on Nov. 11. The merger expands the supermarket giant's footprint into Wisconsin and the Chicago-area. The worst performer was Southwestern Energy Company (N:SWN), which fell 0.68 or 7.22% to 8.74.

On the New York Stock Exchange, advancing issues outnumbered ones by a 1,810 to 1,187 margin.

Additional stock news from Reuters at Investing.com.

Forex

The dollar remained broadly supported at eight-month highs against the other major currencies on Friday, as trading volumes were expected to remain thin for the long Thanksgiving weekend and as hopes for an upcoming U.S. rate hike continued to support.

EUR/USD slid 0.22% to 1.0587, not far from Wednesday's seven-month trough of 1.0564.

The greenback remained broadly supported after a string of upbeat U.S. data released over the week added to expectations that the Federal Reserve will raise interest rates next month.

However, the euro's gains were held in check since European Central Bank President Mario Draghi signaled last week that the bank is ready to act quickly to boost inflation in the euro zone and can also change the level of its deposit rate to boost the impact of quantitative easing.

USD/JPY eased up 0.13% to 122.71.

In Japan, data on Friday showed that household spending fell 0.7% in October, compared to expectations for an increase of 1.1% and after a 1.3% drop the previous month.

A separate report showed that Tokyo's consumer price index rose by an annual rate of 0.2% in November, in line with expectations.

Core CPI, which excludes fresh food, in Tokyo was flat this month, compared to expectations for a 0.1% downtick.

Elsewhere, the dollar was higher against the pound and the Swiss franc, with GBP/USD down 0.36% at 1.5049 and with USD/CHF gaining 0.72% to 1.0311.

The U.K. Office for National Statistics reported on Friday that gross domestic product rose 0.5% in the third quarter, in line with expectations and with a previous estimate.

Year-on-year, U.K. GDP expanded 2.3% in the three months to September, as expected and in line with an initial estimate.

The Australian and New Zealand dollars were weaker, with AUD/USD down 0.53% at 0.7187 and with NZD/USD declining 0.65% to 0.6529.

Meanwhile, USD/CAD climbed 0.56% to trade at 1.3365, not far from Monday's two-month high of 1.3437

The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was up 0.27% at 100.13 ust below Wednesday's eight-month peak of 100.21.

CTFC Commitment of Traders

Speculators this week were were more bullish on the U.S. dollar. Gold and Silver sentiment became less bullish.

cot.2015.nov.18

Gold

Gold futures plunged to six-year lows amid a stronger dollar, as traders brace for a likely interest rate hike by the Federal Reserve next month in a major policy shift that could dampen long-term optimism for the precious metal.

On the Comex division of the New York Mercantile Exchange, gold for December delivery traded in a broad range between $1,051.20 and $1,072.60 an ounce, before settling at $1,057.10, down 12.90 or 1.21% on the session. The sell-off marks the sharpest one-day fall in gold in three weeks. Over the last month of trading, gold has only closed in the green in seven of the last 30 sessions, falling nearly 10% during that span. As a result, gold is testing the $1,000 level, a threshold it has remained above for more than six years since the height of the Financial Crisis.

On Friday, gold fell precipitously in post-Thanksgiving trade, a day typically known for light trading. Gold held steady in overnight Asian trading, before dropping sharply just ahead of the open of U.S. markets. Gold inched up by 0.03% on Thursday when U.S. markets were closed for the Thanksgiving holiday.

Investors continued to price in a series of key monetary policy decisions by Central Banks over the next month, starting with the European Central Bank's Governing Council's meeting in Frankfurt on Thursday. In recent weeks, ECB president Mario Draghi has sent strong indications that the central bank could increase the scope of its comprehensive €60 billion a month quantitative easing program at the meeting. On Wednesday, Reuters reported that the ECB could also impose a two-tiered penalty next week for banks that leave deposits at its facility. The ECB's benchmark refinancing rate is at a record low of 0.05%, while rates at the deposit facility are already in negative territory at minus-0.20%.

Less than two weeks later, the Federal Open Market Committee is expected to raise its benchmark Federal Funds Rate for the first time in more than nine years. The rate, which banks charge on interbank overnight loans at the Fed, has remained at a near-zero level since December, 2008. The divergence between monetary policies in the U.S. and the euro zone has sent the dollar soaring, as foreign investors look to pile into the greenback in order to capitalize on higher yields.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, surged more than 0.3% to an intraday high of 100.26. The index is now points away from its 12-months high at 100.38 in mid-March. For a stretch of five sessions in mid-March the index remained near 100, before falling back when the Fed opted to leave short-term rates unchanged. Over the last year of trading, the index has spiked nearly 14%.

Dollar-denominated commodities such as gold become less expensive for foreign purchasers when the dollar depreciates. A rate hike is also viewed as bearish for the precious metal, which struggles to compete with high-yield bearing assets.

Silver for December delivery fell 0.128 or 0.90% to 14.030 an ounce.

Copper for March delivery added 0.012 or 0.61% to 2.061 a pound.

Oil

U.S. crude futures fell more than 2% as the dollar approached near 12-month highs on a light day of trading following the Thanksgiving holiday.

On the New York Mercantile Exchange, WTI crude traded between $41.61 and $42.74 a barrel, before settling at 41.77, down 1.27 or 2.95% on the session. After jumping by more than $2 a barrel over the first two days of the week, U.S. crude futures ended the week of trading by falling back by more than 1% in each of the last two sessions. One week after slipping below $39 a barrel to test near six-year lows, WTI crude ended the week up by approximately 4%.

On the Intercontinental Exchange (ICE), brent crude futures wavered between $44.80 and $45.64 a barrel, before closing at $44.89, down 0.57 or 1.26% on the day. One day after halting a six-session winning streak, North Sea brent futures fell considerably for the second straight trading day. For the week, brent crude inched up by roughly 0.50%. Meanwhile, the spread between the international and U.S. domestic benchmarks of crude stood at $3.12, above Thursday's level of $3.03 at the close of trading.

Long-term concerns related to oversupply remained in focus ahead of next week's pivotal OPEC meeting in Vienna. Earlier this week, Saudi Arabia sent indications that it could consider adjusting its price and production forecasts in an effort to stabilize global energy markets. Last November, OPEC rattled markets worldwide when it left its production ceiling above 30 million barrels per day. The position triggered an extended battle with U.S. shale producers for market share, flooding markets with a glut of oversupply. As a result, crude futures have slumped by more than 40% over the last year spending the majority of 2015 near lows not previously seen since the Financial Crisis.

Elsewhere, energy traders kept a close eye on geopolitical concerns in the wake of Turkey's downing of a Russia fighter jet on the Syria border on Monday. Turkey president Tayyip Erdogan warned Russia not to play with fire on Friday, before adding that his nation did not want relations to suffer further harm. Turkey purchases approximately 60% of its natural gas from Russia, according to the Wall Street Journal, an amount that comprises a large chunk of the partners' $30 billion a year trade pact.

Major geopolitical issues have taken center stage in the last two weeks since more than 120 civilians were killed in coordinated attacks in Paris on Nov. 13. The Islamic State claimed responsibility for the attacks in France, as well as an attack in Mali days later. In response, France, Russia and the U.S. have launched a series of air strikes at ISIS-controlled oil fields in Syria.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, surged more than 0.3% to an intraday high of 100.26. The index is now points away from its 12-months high at 100.38 in mid-March. For a stretch of five sessions in mid-March the index remained near 100, before falling back when the Fed opted to leave short-term rates unchanged. Over the last year of trading, the index has spiked nearly 14%.

Dollar-denominated commodities such as crude become less expensive for foreign purchasers when the dollar depreciates.

Natural Gas (Thursday Report)

Natural gas for delivery in December on the New York Mercantile Exchange tacked on 2.6 cents, or 1.13%, to trade at $2.374 per million British thermal units during U.S. morning hours. Prices were at around $2.335 prior to the release of the supply data.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended November 13 rose by 15 billion cubic feet, below expectations for an increase of 18 billion.

That compared with builds of 49 billion cubic feet in the prior week, 40 billion cubic feet in the same week last year, while the five-year average change for the week is an increase of 30 billion cubic feet.

Total U.S. natural gas storage stood at an all-time high of 4.000 trillion cubic feet, 10.1% higher than levels at this time a year ago and 5.2% above the five-year average for this time of year.

Last spring, supplies were 55% below the five-year average, indicating producers have more than made up for all of last winter's unusually strong demand.

A day earlier, natural gas prices lost 2.4 cents, or 1.01%, as forecasts for the next two weeks turned milder, dampening near-term demand expectations for the heating fuel.

Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting outlooks on early-winter heating demand.

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

Natural gas prices typically rise ahead of the winter as colder weather sparks heating demand. But a mild start to the winter heating season underlined concerns over a deepening supply glut, driving prices to multi-year lows near $2 per million British thermal units at the end of October.

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