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posted on 12 August 2016 Weekly Wrap-Up 12 August 2016

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U.S. stocks flat, as NASDAQ extends weekly winning streak to seven

U.S. stocks retreated on Friday from record-highs on Thursday in quiet trade, as a bevy of dismal economic data increased the prospects for a delayed interest rate hike from the Federal Reserve, weighing on beaten down bank stocks.

The Dow Jones Industrial Average fell 37.05 or 0.20% to 18,576.47, while the S&P Composite index lost 1.74 or 0.08% to 2,184.05, both bouncing off session-lows at the close of trading. The NASDAQ Composite index, meanwhile, edged up 4.50 or 0.09% to 5,232.90, ending the session at a record closing-high for the second straight day.

Driven by a determined rally among tech stocks, the NASDAQ closed higher for a seventh consecutive week - its longest streak of sustained weekly gains since 2012. Both the Dow and the S&P 500 also closed slightly higher on the week.

On the S&P 500, six of 10 sectors closed in the red as stocks in the Basic Materials, Industrials and Telecom industries lagged, each falling by more than 0.3%. Stocks in the Energy and Consumer Services sectors led. It came one day after all three major indices ended Thursday's session at all-time record closing highs, an occurrence which last transpired in December, 1999.

On Friday morning, the U.S. Bureau of the Census said retail sales were unchanged in July on a monthly basis, falling sharply below expectations for a 0.4% gain. At the same time, producer prices also moved lower on the month, while the University of Michigan said consumer sentiment has been flat for the first two weeks of August, amid considerable declines in the Current Conditions component.

With participants on the Federal Open Market Committee (FOMC) largely split on the timing of its next interest rate hike, Friday's data could appease dovish arguments for holding rates steady for the remainder of the year. As a result, the KBE SPDR S&P Bank ETF inched down on Friday extending considerable losses over the last month. Since late-July, the bank sector exchange traded fund has fallen 5%, due primarily to a flattening yield curve and modest loan growth.

The top performer on the Dow was Exxon Mobil Corporation (NYSE:XOM), which rose 1.13 or 1.30% to 87.85. Both ExxonMobil and Chevron Corporation (NYSE:CVX) received a boost on Friday, after U.S. crude futures gained 2% for the day to remain near three-week highs. In Friday's session, energy traders continued to cover short positions one day after Saudi Arabia's energy minister said the kingdom could be open to discussing ways to stabilize persistently low oil prices at a conference in Algeria next month. The worst performer was EI du Pont de Nemours and Company (NYSE:DD), which fell 1.33 or 1.94% to 67.66.

The biggest gainer on the NASDAQ was Jd.Com Inc Adr (NASDAQ:JD), which added 1.36 or 5.84% to 24.65. The Chinese e-Commerce site finished just ahead of NVDA, which rose by 3.34 or 5.59% to 63.03. After soaring more than 130% over the last six months, Nvidia hit all-time highs on Friday. Shares in the Silicon Valley tech company, have surged in recent months as semiconductors continue to rally from a dry spell at the start of the year. The worst performer was Henry Schein Inc (NASDAQ:HSIC), which fell 2.00 or 1.19% to 165.46.

On the New York Stock Exchange, declining issues outnumbered advancing ones by a 1,527-1,413 margin.

Additional stock news from Reuters at with more details on U.S. and world markets.


The dollar trimmed losses against the other major currencies on Friday, but remained under broad selling pressure as disappointing U.S. data dampened optimism over the strength of the economy and lowered expectations for a 2016 rate hike by the Federal Reserve.

In a preliminary report, the University of Michigan said its consumer sentiment index rose to 90.4, from July's reading of 90.0. Analysts had forecast a larger increase to 91.5.

The data came after the U.S. Commerce Department said retail sales were flat in July, compared expectations for a 0.4% rise.

Core retail sales, which exclude automobile sales, fell by 0.3% in July, compared to forecasts for an advance of 0.2%.

A separate report showed that U.S. producer prices fell by 0.4% last month, disappointing expectations for a 0.1% rise and after a 0.5% gain in June.

Year-over-year, producer prices decreased by 0.2%, confounding expectations for a gain of 0.2%.

EUR/USD gained 0.32% to 1.1173.

The euro found some support after Eurostat said that euro zone gross domestic productrose 0.3% in the second quarter, unchanged from the previous quarter and in line with consensus forecasts.

Year-on-year, GDP in the single currency bloc rose 1.6% in the second quarter, matching both the expansion in the first three months of the year and the forecast.

The data was released after Germany surprised markets earlier on Friday with growth of 0.4%, compared to the 0.2% increase expected.

A separate report showed that euro zone industrial production rose 0.6% in June, beating expectations for a 0.5% gain and after a 1.2% decline the previous month.

GBP/USD edged down 0.12% to 1.2940, close to the previous session's one-month low of 1.2934.

USD/JPY retreated 0.89% to 101.04, while USD/CHF shed 0.22% to 0.9733.

The Australian dollar was fractionally lower, with AUD/USD down 0.08% at 0.7692, whileNZD/USD rose 0.26% to 0.7229.

Statistics New Zealand earlier reported that retail sales increased by 2.3% in the second quarter, exceeding expectations for a 0.9% rise.

Core retail sales, which exclude automobiles and gas stations, rose 2.6% in the last quarter.

Elsewhere, USD/CAD slid 0.30% to trade at 1.2954.

Markets were also jittery on Friday after data showed that China's industrial production rose by an annualized rate of 6.0% in July, compared to expectations for a 6.1% increase.

Another report showed that the country's retail sales rose by an annualized rate of 10.2% last month, confounding expectations for a 10.5% increase.

The data added to concerns over a slowdown in the world's second largest economy.

The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was down 0.32% at 95.59, off the one-and-a-half week low of 95.19 hit earlier in the day.

CTFC Commitment of Traders

This week bearishness increased again on the pound. Bullishness increased for the yen. Most changes in sentiment this weak were subdued.

Note: This data closes on Wednesday so the last two days of trading are not reflected. There were was very little change in investor sentiment this week.



Gold fell slightly on Friday, even as a wave of lackadaisical economic data dampened optimism for an imminent rate hike from the Federal Reserve, as a key technical gauge provided signals that the strongest rally in three decades could be on the verge of receding.

On the Comex division of the New York Mercantile Exchange, Gold for December delivery traded between $1,338.90 and $1,361.65 an ounce before settling at $1,343.05, down 6.95 or 0.51% on the session. After opening around $1,330 an ounce on Monday, Gold edged up marginally over the last five sessions to close in positive territory for the week. While Gold has surged by more than 25% year to date, the precious metal has fallen back by approximately $30 an ounce since hitting 28-month highs in early-July.

On Friday morning, the U.S. Bureau of the Census said that retail sales were unchanged in July on a monthly basis, falling sharply below expectations for a 0.4% gain. The pace of consumer spending slowed in July, one month after sales soared by 0.6% for the period. Purchases across numerous categories largely dried up for the second month of the summer with the exception of auto sales which jumped by 1.1%. As a result, retail sales minus auto purchases dipped by 0.3% for July, marking its first decline since March.

Separately, the University of Michigan's flash Consumer Sentiment Index for August came in relatively flat at 90.4, finishing under analysts' forecasts of a 1.0 gain to 91.0. Weakness was seen in Current Conditions which plunged by 2.9 points for the period to 106.1. At the same time, the Expectations component jumped 3.5% to 80.3, reflecting rising confidence in the near-term jobs outlook throughout the U.S.

Earlier, the U.S. Bureau of Labor Statistics (BLS) said its Producer Price Index for Final Demand (PPI-FD) retreated by 0.4% in July, defying expectations from analysts of a slight 0.1% gain, The subdued reading halted any momentum gained from a stellar report in June when the PPI-FD soared by 0.5%. Core PPI-FD, which strips out volatile food and energy prices, also fell by 0.3%. The sluggish inflation data could provide ammunition for dovish members of the Federal Reserve in their arguments for a delayed interest rate hike.

Any rate hikes by the U.S. central bank this year are viewed as bearish for gold, which struggles to compete with high-yield bearing assets in rising rate environments.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell by more than 0.35% to an intraday low of 95.19. Since hitting a four-month high at 97.62 in late-July, the Dollar has fallen back by approximately 2%.

Dollar-denominated commodities such as Gold become more expensive for foreign purchasers when the dollar appreciates.

Silver for September delivery fell 0.278 or 1.39% to 19.742 an ounce.

Copper for September delivery lost 0.051 or 2.33% to 2.140 a pound


Crude futures extended sharp rallies from the previous session on Friday, as investors continued to cover short positions one day after Saudi Arabia energy minister Khalid al-Falih hinted that the kingdom could be open to discussions next month aimed at stabilizing persistently low oil prices.

On the New York Mercantile Exchange, WTI crude for September delivery traded between $43.30 and $44.60 a barrel before closing at $44.48, up 1.01 or 2.32% on the session. For the week, U.S. crude futures surged more than 5% -- enjoying its best weekly gain since April. On the Intercontinental Exchange (ICE), brent crude for October delivery wavered between $45.75 and $47.05 a barrel, before settling at $46.95, up 0.91 or 1.98% on the day.

Both the international and U.S. benchmarks of crude ended the session near three-week highs, one day after soaring more than 4% following Al-Falih's comments. Earlier this week, OPEC president Mohammed bin Saleh al-Sada helped spark a rally on global energy markets by remarking that officials from leading oil producers could meet on the sidelines of next month's International Energy Forum (IEF) in Algeria, their first informal meeting since the 14-member cartel left its production ceiling unchanged at a closely-watched meeting in June.

"We are going to have a ministerial meeting of IEF in Algeria next month, and there is an opportunity for OPEC and major exporting non-OPEC ministers to meet and discuss the market situation, including any possible action that may be required to stabilize the market," Al-Falih said in a statement, via Saudi News Agency SPA.

On Wednesday, OPEC said in its August Oil Market report that Saudi Arabia pumped 10.67 million barrels per day last month, the kingdom's highest level on record. As production resumes in Canada, Nigeria and Libya, three regions beset by a variety of slowdowns throughout the spring, market players have increased their short bets in crude futures and options, amid broad signals that the global supply glut could intensify.

Last week, the U.S. Commodity Futures Trading Commission (CFTC) said short positions in WTI rose to 218, 623 for the week ending on Aug. 2, the highest amount since 2006. The CFTC is set to release fresh weekly data on Friday afternoon before the close of U.S. equity markets. See the section earlier in this article for that latest report.

"The large short positioning in the market has caused the oil price to undershoot. However, this is unsustainable," Al-Falih added. "To reverse the declines in investment and output, oil prices have to go up from the current levels."

Elsewhere, investors largely shrugged off a bearish report from Baker Hughes which said that the U.S. weekly oil rig count rose by 15 to 396 last week. The number of oil rigs nationwide has increased in each of the last seven weeks. Following last week's gains, the oil rig count is now at its highest level since February 26.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell by more than 0.35% to an intraday low of 95.19. Since hitting a four-month high at 97.62 in late-July, the Dollar has fallen back by approximately 2%.

Dollar-denominated commodities such as Crude become more expensive for foreign purchasers when the dollar appreciates.

Natural Gas (Thursday Report)

U.S. natural gas futures sank to a two-month low in North America trade on Thursday, after data showed that natural gas supplies in storage in the U.S. rose more than forecast last week.

Natural gas for delivery in September on the New York Mercantile Exchange slumped 2.1 cents, or 0.82%, to trade at $2.540 per million British thermal units by 14:34GMT, or 10:34AM ET.

Prices dropped to as low as $2.530 immediately after the report, a level not seen since June 9. Futures were at around $2.573 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. rose by 29 billion cubic feet in the week ended August 5, more than forecasts for an increase of 25 billion.

That compared with a surprise drop of 6 billion cubic feet in the preceding week, 65 billion a year earlier and a five-year average of 53 billion cubic feet.

Total U.S. natural gas storage stood at 3.317 trillion cubic feet, 10.9% higher than levels at this time a year ago and 13.3% above the five-year average for this time of year.

A day earlier, prices sank 5.4 cents, or 2.07%, as traders reacted to milder weather and the reality that higher summer demand for the commodity is coming to an end.

Demand for natural gas tends to rise in the summer months as warmer temperatures increase the need for gas-fired electricity to power air conditioning.

Natural gas futures have been under pressure in recent days amid speculation that August heat won't prevent stockpiles from reaching a record before the winter.

Unless intense summer heat boosts demand from power plants, stockpiles will test physical storage limits of 4.3 trillion cubic feet at the end of October.

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