Investing.com Weekly Wrap-Up 15 February 2012

by Investing.com Staff, Investing.com

U.S. stocks end flat on soft industrial production data; Dow gains 0.06%

U.S. stocks finished Friday flat to lower after poor industrial production figures washed out appetite for equities and sent investors chasing dollar positions and other safe-haven assets.

At the close of U.S. trading, the Dow Jones Industrial Average finished up 0.06%, the S&P 500 index ended down 0.10%, while the Nasdaq Composite index fell 0.21%.

Official data showed that U.S. industrial production slipped 0.1% in January, missing expectations for a 0.2% rise after a 0.4% increase the previous month.

Elsewhere in the U.S., economic indicators came in solid, though the weak industrial production figures coming from the country’s mines, factories and utilities weighed on sentiments.

In a preliminary report, the University of Michigan said that its index of consumer sentiment rose to 76.3 in February from 73.8 the previous month, well above expectations for a rise to 74.8.

Meanwhile, the Federal Reserve Bank of New York reported that its index of manufacturing activity beat expectations in February, rising to 10.0 from a reading of -7.8 the previous month.

Analysts had expected the index to improve to -2 this month.

Meanwhile, a G20 meeting is underway in Moscow, and market talk that policymakers won’t voice major concern about a sliding yen and other currencies fueled dollar demand as well, giving investors another reason to hang out in the safe an liquid greenback until better news hits stock markets another day.

Leading Dow Jones Industrial Average performers included Coca-Cola, up 1.57%, Walt Disney, up 1.31%, and United Technologies, up 1.18%.

The Dow Jones Industrial Average’s worst performers included Wal-Mart Stores, down 2.15%, Hewlett-Packard, down 1.35%, and American Express, down 1.07%.

European indices, meanwhile, finished largely lower.

After the close of European trade, the EURO STOXX 50 fell 0.76%, France’s CAC 40 fell 0.25%, while Germany’s DAX 30 finished down 0.49%. Meanwhile, in the U.K. the FTSE 100 finished up 0.01%.

Forex

The dollar rose against most major currencies on Friday after Federal Reserve Chairman Ben Bernanke said that despite high unemployment rates, the U.S. economy was improving.

Talk a G20 summit won’t end with warnings for member nations not to devalue their currencies pushed the greenback as did soft industrial production figures.

In U.S. trading on Friday, EUR/USD was down 0.06% at 1.3356.

A G20 summit is underway in Moscow, and talk that the final draft of the meeting will not involve accusations of devaluations taking place in Japan and in other countries where currencies have been weakening fueled dollar demand.

The yen rose on recent fears Japan may be accused of tinkering with its exchange rate to weaken it, though talk that G20 ministers remain comfortable with exchange rates today allowed the yen to continue its slide, which sent the dollar gaining.

The dollar also saw demand after Federal Reserve Chairman Ben Bernanke told G20 finance ministers and central bankers earlier that while unemployment rates remain high in the U.S., the economy is improving.

The news sent the greenback rising on sentiment the Fed may be closer to considering winding down its USD85 billion monthly bond-buying program, a monetary stimulus tool that weakens the dollar to spur recovery and job demand.

Soft activity in U.S. mines, utilities and factories fueled dollar demand as well.

Official data showed that U.S. industrial production slipped 0.1% in January, missing expectations for a 0.2% rise after a 0.4% increase the previous month.

Elsewhere in the U.S., economic indicators came in solid.  In a preliminary report, the University of Michigan said that its index of consumer sentiment rose to 76.3 in February from 73.8 the previous month, well above expectations for a rise to 74.8.

Meanwhile, the Federal Reserve Bank of New York reported that its index of manufacturing activity beat expectations in February, rising to 10.0 from a reading of -7.8 the previous month. 
Analysts had expected the index to improve to -2 this month.

The greenback, meanwhile, was down against the pound, with GBP/USD trading up 0.13% at 1.5512.

The dollar firmed against the yen, with USD/JPY traded up 0.62% to 93.50.  The pair is likely to find support at 92.23, the earlier low, and resistance at 93.84, the earlier high.

Earlier this week, the G7 group of wealthy nations issued a statement expressing concern over weakening currencies and urged policymakers to allow markets to determine the value of a currency and not actively devalue, which markets interpreted as a message to Japan.

The Japanese yen has weakened notably in recent weeks thanks to Prime Minister Shinzo Abe’s repeated calls for looser monetary policies to prioritize growth over keeping inflation in a tight range, though no G7 officials have said the country was actively devaluing its currency.

The yen shot up in recent sessions after the G7 issued its statement urging the world’s policymakers to not devalue currencies.

Yet the G20 summit is underway, and talk grew on Friday that the statement will echo the G7 statement and urge countries to let markets determine exchange rates but won’t make mention of country-specific devaluation concerns, which boosted the dollar on Friday and let the yen resume its slide.

The dollar rose against the Swiss franc, with USD/CHF trading up 0.12% at 0.9223.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.61% at 1.0071, AUD/USD down 0.63% at 1.0295 and NZD/USD trading down 0.76% at 0.8446.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.12% at 80.57.

Gold

Gold prices fell to 6-month lows on Friday after Federal Reserve Chairman Ben Bernanke said the U.S. economy was improving, which sent gold prices falling and the dollar rising amid talk that monetary stimulus measures may wind down soon.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery were down 1.78% at USD1,606.45 a troy ounce in U.S. trading on Friday, up from a session low of USD1,598.25 and down from a high of USD1,635.95 a troy ounce.

Gold futures were likely to test support USD1,590.25 a troy ounce, the low from Aug. 15, 2012, and resistance at USD1,635.95, the earlier high.

Bernanke told a G20 meeting of finance ministers and central bankers earlier that while unemployment rates remain high in the U.S., the economy is improving and will help bring the global economy up with it.

The news sent gold falling on sentiment the Fed may be closer to considering winding down its USD85 billion monthly bond-buying program, a monetary stimulus tool that weakens the dollar to spur recovery and job demand.

Gold and the dollar normally trade inversely from one another.
Weak output data fueled safe-haven dollar demand as well, which came at gold’s expense.

Official data showed that U.S. industrial production contracted by 0.1% in January, missing expectations for a 0.2% rise and well below a 0.4% increase the previous month.

Meanwhile on the Comex, silver for March delivery was down 1.84% and trading at USD29.795 a troy ounce, while copper for March delivery was up 0.01% and trading at USD3.738 a pound.

Oil

Oil prices dropped in U.S. trading on Friday after the country’s industrial production data missed expectations.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in March traded at USD95.62 a barrel on Friday, down 1.74%, off from a session high of USD97.47 and up from an earlier session low of USD95.24.

Official data showed that U.S. industrial production contracted by 0.1% in January, missing expectations for a 0.2% rise and well below a 0.4% increase the previous month.

The numbers sent oil prices dropping on sentiments that less output in the country’s mines, utilities and factories will mean less demand for energies and fuels than once thought.

The data overshadowed solid consumer sentiment figures and the strong index of manufacturing activity reported by the Federal Reserve Bank of New York .

Meanwhile in Europe, the eurozone’s trade surplus rose unexpectedly in December, official data showed on Friday.  In a report, Eurostat said that eurozone trade surplus rose to EUR11.7 billion from EUR10.5 billion in November.  Analysts had expected eurozone trade surplus to hit EUR10.7 billion.

Natural Gas

Natural gas futures extended Thursday’s losses into afternoon trading on Friday after official data revealed that stockpiles fell less than expected last week.

On the New York Mercantile Exchange, natural gas futures for delivery in March traded at USD3.155 per million British thermal units, down 0.27%.

The commodity hit a session low of USD3.126 and a high of USD3.193.

The U.S. Energy Information Administration said in its weekly report on Thursday that natural gas storage in the U.S. in the week ended Feb. 8 fell by 157 billion cubic feet, below expectations for a drop of 162 billion cubic feet.

Inventories fell by 113 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 154 billion cubic feet.

Total U.S. natural gas storage stood at 2.527 trillion cubic feet as of last week. Stocks were 270 billion cubic feet less than last year at this time and 348 billion cubic feet above the five-year average of 2.179 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 94 billion cubic feet above the five-year average, following net withdrawals of 116 billion cubic feet.

Stocks in the Producing Region were 185 billion cubic feet above the five-year average of 775 billion cubic feet after a net withdrawal of 33 billion cubic feet.

Updated weather forecast models continued to call for below-normal readings for most of the nation for the latter half of February, which curbed losses.  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 for the year.  About half of U.S. households use gas for heating purposes, according to Energy Department data.