Investing.com Weekly Wrap-Up 08 February 2012

Closing the Week with Investing.com

by Investing.com Staff, Investing.com

The dollar traded slightly higher against most other currencies on Friday after European Central Bank President Mario Draghi said the European economy is still weak, which fueled demand for the safe and liquid greenback.

In U.S. trading on Friday, EUR/USD was down 0.29% at 1.3359. On Thursday, ECB President Draghi warned that economic weakness would stick around during the early part of 2013 and added recovery would kick in later in the year, which weighed on the euro against the dollar.

Draghi added that the euro’s recent strengthening trend reflected a return of investor confidence in the eurozone.

Solid U.S. and Chinese trade data capped the greenback’s gains as some traders took up equity positions.

The U.S. Commerce Department reported earlier that U.S. trade deficit in December narrowed to USD38.5 billion from a USD48.6 billion deficit in November.

Analysts were expecting the trade deficit to only narrow to USD46 billion.
Meanwhile in Asia, the Chinese trade surplus fell in January from December thanks to a surge in imports, fueling talk of an improving global economy.

The country’s trade surplus hit USD29.20 billion last month, down from a USD31.60 billion surplus reported in December.

Analysts were expecting a USD22 billion surplus.

Elsewhere in Europe, E.U. leaders agreed on common budget cuts, the first ever.

The agreement should set a 2014-2020 spending ceiling of EUR960 billion, down from an original proposal of EUR1.047 trillion and less than the EUR994 billion spent in the current budget cycle.

The greenback, meanwhile, was down against the pound, with GBP/USD trading up 0.54% at 1.5797.

The dollar fell against the yen, with USD/JPY trading down 0.84% at 92.86 and down against the Swiss franc, with USD/CHF trading down 0.05% at 0.9187.

Japanese Finance Minister Taro Aso earlier said the yen’s weakening trend was taking place too rapidly, which fueled demand for the Japanese currency on sentiments the government may allow the currency to depreciate at a slower pace.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.49% at 1.0027, AUD/USD up 0.34% at 1.0316 and NZD/USD trading up 0.17% at 0.8346.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.03% at 80.31.

Stocks

U.S. stocks opened higher on Friday, after the release of positive trade balance reports from the U.S. and China.

During early U.S. trade, the Dow Jones Industrial Average rose 0.35%, the S&P 500 index climbed 0.47%, while the Nasdaq Composite index jumped 1.06%. By the close all three indices were still near early levels: Dow +0.35%, S&P 500 +0.57% and Nasdaq +0.91%.

Official data showed that the U.S. trade deficit narrowed more-than-expected in December, moving to USD38.5 billion from a deficit of USD48.6 billion. Analysts had expected the trade deficit to narrow to USD46 billion in December.

Sentiment improved earlier, after a report showed that China’s trade surplus narrowed less-than-expected in January, falling to USD29.20 billion from a surplus of USD31.60 billion, compared to expectations for a fall to USD22 billion.

The data added to hopes that the world’s second largest economy is on the road to recovery.

LinkedIn saw shares soar 17.50% after announcing quarterly profits that exceeded expectations and a bullish forecast for 2013.

Also among earnings, Activision Blizzard surged 9.33% after the videogame publisher topped earnings and revenue expectations and handed in current-quarter guidance that beat estimates.

In the tech sector, RadioShack rallied 4.50% after it named Walgreen executive Joseph Magnacca as its new chief executive, hoping it will help boost sales.

Separately, chipmaker Microchip Technology advanced 6.16%, after forecasting a larger-than-expected profit and revenue for the current quarter after reporting third-quarter results that beat analysts’ expectations.

Elsewhere, DreamWorks Animation rose 0.43% after the Wall Street Journal reported that the company might cut a maximum of 500 jobs from its 2,000 member workforce following disappointing holiday results and delays to its film lineup.

Financial stocks added to gains, as shares in Citigroup added 0.28% and Bank of America advanced 0.42%, while JP Morgan climbed 0.46% and Goldman Sachs jumped 0.77%.

On the downside, Boeing dropped 0.61%, even as U.S. agencies cleared the aircraft company to restart test flights of its grounded 787 Dreamliners in order to get more data on potentially faulty batteries.

However, they also demanded a closer look at how the batteries were approved, which may delay resuming delivery of Boeing’s newest aircraft.

Across the Atlantic, European stock markets were sharply higher. The EURO STOXX 50 jumped 1.02%, France’s CAC 40 surged 1.10%, Germany’s DAX advanced 0.64%, while Britain’s FTSE 100 rallied 0.71%.

During the Asian trading session, Hong Kong’s Hang Seng Index added 0.16%, while Japan’s Nikkei 225 Index tumbled 1.8%.

Gold

Gold prices fell on Friday after European Central Bank President Mario Draghi warned that the eurozone economy won’t see noted recovery until closer to the end of the year.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery were down 0.24% at USD1,667.35 a troy ounce in U.S. trading on Friday, up from a session low of USD1,665.95 and down from a high of USD1,674.15 a troy ounce.

Gold futures were likely to test support USD1,664.05 a troy ounce, Thursday’s low, and resistance at USD1,683.85, Thursday’s high.

On Thursday, ECB President Draghi warned that economic weakness would stick around during the early part of 2013 and added recovery would kick in later”in the year, which weighed on the euro against the dollar, often a recipe for falling gold prices.

Draghi added that the euro’s recent strengthening trend reflected a return of investor confidence in the eurozone.

The metal did see support on solid U.S. and Chinese trade data.

The U.S. Commerce Department reported earlier that U.S. trade deficit in December narrowed to USD38.5 billion from a USD48.6 billion deficit in November.

Analysts were expecting the trade deficit to only narrow to USD46 billion.
Meanwhile in Asia, the Chinese trade surplus fell in January from December thanks to a surge in imports, fueling talk of an improving global economy.

The country’s trade surplus hit USD29.20 billion last month, down from a USD31.60 billion surplus reported in December.

Analysts were expecting a USD22 billion surplus.

Meanwhile on the Comex, silver for March delivery was up 0.19% and trading at USD31.462 a troy ounce, while copper for March delivery was up 0.87% and trading at USD3.760 a pound.

Oil

Improving trade balances in the U.S. and China fueled hopes the global economy may be on the mend and will demand more fuels and energy going forward, sending oil prices rising on Friday.

Rising tensions in the Middle East bolstered prices as well, though profit takers sent the commodity back into negative territory in afternoon trading.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in March traded at USD95.63 a barrel on Friday, down 0.21%, off from a session high of USD96.56 and up from an earlier session low of USD95.30.

Solid trade figures and tensions in Iran sent oil prices gaining to levels ripe for a brief spat of profit taking on Friday.

The U.S. Commerce Department reported earlier that U.S. trade deficit in December narrowed to USD38.5 billion from a USD48.6 billion deficit in November.

Analysts were expecting the trade deficit to only narrow to USD46 billion.
Meanwhile in Asia, the Chinese trade surplus fell in January from December thanks to a surge in imports, fueling talk of an improving global economy.

The country’s trade surplus hit USD29.20 billion last month, down from a USD31.60 billion surplus reported in December.

Analysts were expecting a USD22 billion surplus.

Meanwhile in Iran, the country’s supreme leader, Ayatollah Ali Khamenei, rejected calls from the United States to hold face-to-face talks to end an ongoing nuclear standoff.

The West accuses Iran of developing a nuclear weapons program, a charge Tehran denies.

In the past, Iran has threatened to close the Strait of Hormuz, a narrow waterway connecting oil-rich Persian Gulf countries with the rest of the world.

Elsewhere on the ICE Futures Exchange, Brent oil futures for March delivery were up 1.22% at USD118.67 a barrel, up USD23.04 from its U.S. counterpart.

Natural Gas

Natural gas futures extended Thursday’s losses into Friday after the U.S. Energy Information Administration reported that supplies fell less than anticipated last week.

On the New York Mercantile Exchange, natural gas futures for delivery in March traded at USD3.280 per million British thermal units, down 0.14%.

The commodity hit a session low of USD3.271 and a high of USD3.326.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended Feb. 1 fell by 118 billion cubic feet, less than expectations for a drop of 132 billion cubic feet.

Inventories fell by 94 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 165 billion cubic feet.

Total U.S. natural gas storage stood at 2.684 trillion cubic feet as of last week. Stocks were 226 billion cubic feet less than last year at this time and 351 billion cubic feet above the five-year average of 2.333 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 118 billion cubic feet above the five-year average, following net withdrawals of 88 billion cubic feet.

Stocks in the Producing Region were 174 billion cubic feet above the five-year average of 819 billion cubic feet after a net withdrawal of 20 billion cubic feet.

Elsewhere, Winter Storm Nemo roared across the northeastern U.S. and threatened to dump up to three feet of snow in some parts of the country, though investors have already priced in cooler temperatures.

Weather services have forecast colder-than-normal temperatures to settle in for much of the U.S. in the coming days.

Natural gas futures are very sensitive to weather reports in the U.S. winter.

The U.S. heating season running from November through March sees peak demand for gas.

About half of U.S. households use gas for heating purposes, according to Energy Department data.