Investing.com Weekly Wrap-Up 07 June 2013

by Investing.com Staff, Investing.com

U.S. stocks sharply higher after jobs data; Dow Jones up 1%

U.S. stocks were sharply higher on Friday, after the release of mixed employment data dampened expectations for the Federal Reserve to scale back its bond-buying program.

During early U.S. trade, the Dow Jones Industrial Average jumped 1%, the S&P 500 index gained 0.91%, while the Nasdaq Composite index climbed 0.75%.

The Bureau of Labor Statistics said the U.S. economy added 175,000 jobs in May, beating expectations for a 170,000 increase, after 149,000 jobs were created the previous month.

However, the report also showed that the U.S. unemployment rate ticked up to 7.6% last month, from 7.5% in April. Analysts had expected the unemployment rate to remain unchanged.

Wal-Mart shares jumped 1.12% after the big-box retailer authorized a new USD15 billion share repurchase program.

Adding to gains, U.S.-traded shares of GlaxoSmithKline surged 1.25% after U.S. advisers said the firm’s best-selling diabetes pill Avandia may have been overstated and restrictions on prescribing the drug should be eased.

On the downside, AT&T slid 0.48% after saying second-quarter TV, Internet and mobile-phone subscriber growth is improving compared with a year earlier. The company added however that the costs to lure customers is cutting into profits.

Tech stocks were also in focus, as a number of U.S. technology providers including Apple and Yahoo! said they don’t give the U.S. government direct access to their systems, responding to newspaper reports of a top-secret electronic surveillance program.

Apple shares were down 0.52% at the open of the U.S. trading session, while Yahoo! rallied 1.32%.

The Washington Post and the Guardian reported late Thursday that the National Security Agency and the Federal Bureau of Investigation access the central servers of nine U.S. Internet companies, extracting audio and video chats, photographs, e-mails, documents and connection logs.

In the same sector, Intel dropped 0.91% after Piper Jaffray downgraded its rating on the chipmaker to “underweight” from “neutral,” pointing to the decline in the company’s core PC business.

Across the Atlantic, European stock markets were sharply higher. The EURO STOXX 50 surged 1.43%, France’s CAC 40 rallied 1.29%, Germany’s DAX gained 1.47%, while Britain’s FTSE 100 jumped 1.13%.

During the Asian trading session, Hong Kong’s Hang Seng Index tumbled 1.05%, while Japan’s Nikkei 225 Index retreated 0.85%.

Forex

The better-than-expected U.S. jobs report for May sent the dollar firming against the pound on Friday

In U.S. trading on Friday, GBP/USD was trading at 1.5547, down 0.36%, up from a session low of 1.5489 and off from a high of 1.5618.

The pair was likely to find support at 1.5489, the earlier low, and resistance at 1.5618, the earlier high.

Lackluster or disappointing data in the U.S. often soften the dollar by stoking expectations that the Federal Reserve will keep monetary stimulus programs in place, including its USD85 billion bond-buying program that weakens the greenback to spur recovery.

Meanwhile in the U.K., official data revealed that the trade deficit narrowed more than expected in April, narrowing to GBP8.2 billion from a GBP9.2 billion deficit the previous month.

Analysts were expecting the trade deficit to narrow to GBP8.8 billion in April.

In a separate report, the Bank of England said its inflation expectations remained unchanged at 3.6%, which gave the pound some support.

The pound, meanwhile, was down against the euro and up against the yen, with EUR/GBP trading up 0.20% at 0.8507 and GBP/JPY up 0.19% at 151.57.

The euro softened against the dollar on Friday after official U.S. employment data beat expectations and put to rest concerns monetary stimulus measures will stay in play for longer than once anticipated.

In U.S. trading on Friday, EUR/USD was down 0.16% at 1.3223, up from a session low of 1.3193 and off from a high of 1.3285.

The pair was likely to find support at 1.3054, Thursday’s low, and resistance at 1.3306, Thursday’s high.

Gold

Gold prices fell on Friday after the U.S. government reported that the economy picked up more jobs than expected in May, which strengthened the dollar.

Gold and the dollar tend to trade inversely with one another.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery were down 2.68% at USD1,377.85 a troy ounce in U.S. trading on Friday, up from a session low of USD1,377.35 and down from a high of USD1,417.45 a troy ounce.

Gold futures were likely to test support USD1,374.75 a troy ounce, the low from May 28, and resistance at USD1,423.25, Thursday’s high.

Elsewhere on the Comex, silver for July delivery was down 4.29% at USD21.733 a troy ounce, while copper for July delivery was down 1.58% and trading at USD3.267 a pound.

Oil

Oil prices rose on Friday after the U.S. government reported the world’s largest economy picked up more nonfarm payrolls than expected in May.

On the New York Mercantile Exchange, light sweet crude futures for delivery in July traded up 1.54% at USD96.22 a barrel on Friday, off from a session high of USD96.38 and up from an earlier session low of USD93.75.

Elsewhere, official data revealed that German industrial production rose 1.8% in April, beating expectations for a 0.2% decline and after a 1.2% increase the previous month, which pushed up oil prices even more.

Supply data released on Wednesday continued to support the commodity as well.

The U.S. Energy Information Administration said in its weekly report on Wednesday that U.S. crude oil inventories fell by 6.3 million barrels in the week ended May 31, shooting way past expectations for a decline of 356,000 barrels.

Total U.S. crude oil inventories stood at 391.3 million barrels as of last week.

The report also showed that total motor gasoline inventories decreased by 366,000 barrels, compared to expectations for an increase of 522,000 barrels.

Heating oil futures for July delivery were up 1.22% at USD2.9063 per gallon.

On the ICE Futures Exchange, Brent oil futures for July delivery were up 1.05% at USD104.70 a barrel, up USD8.48 from its U.S. counterpart.

Natural Gas

Natural gas prices rose on Friday after bargain hunters snapped up nicely priced positions and erased losses stemming from Thursday’s bearish supply data.

In the New York Mercantile Exchange, natural gas futures for delivery in July traded at USD3.830 per million British thermal units, up 0.07%.

The commodity hit a session low of USD3.815 and a high of USD3.869.

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 May 31 rose by 111 billion cubic feet, far above market expectations for an increase of 95 billion.

Inventories rose by 72 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a rise of 92 billion cubic feet.

Total U.S. natural gas storage stood at 2.252 trillion cubic feet as of last week. Stocks were 616 billion cubic feet less than last year at this time and 69 billion cubic feet below the five-year average of 2.321 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 106 billion cubic feet below the five-year average, following net injections of 58 billion cubic feet.

Stocks in the Producing Region were 10 billion cubic feet below the five-year average of 898 billion cubic feet after a net injection of 37 billion cubic feet.

The data sent prices falling by over 4% upon release though bottom fishers sent the commodity into positive territory on Friday.

Weather forecasts pointing to hotter temperatures for much of the country over the next two weeks sent prices gaining as well.

Higher temperatures send prices rising on sentiments that demand for natural gas will increase at the country’s thermal power plants as businesses and households power their air conditioning units, though talk of unseasonably cooler mercury readings can push prices lower.