Investing.com Weekly Wrap-Up 02 August 2013

by Investing.com Staff, Investing.com

U.S. stocks gain despite soft July jobs report; Dow rises 0.19%

U.S. stocks rose on Friday despite a disappointing July jobs report, as investors took the data as a sign the Federal Reserve will continue stimulating the economy with its monthly bond-buying program, which pushes up equities prices by keeping long-term borrowing costs down.

At the close of U.S. trading, the Dow Jones Industrial Average finished up 0.19%, the S&P 500 index rose 0.16%, while the Nasdaq Composite index rose 0.38%.

The Bureau of Labor Statistics said the U.S. economy added 162,000 jobs in July, missing expectations for an increase of around 189,000. 

The report also revealed that the U.S. unemployment rate ticked down to 7.4% in July from 7.6% the previous month. Analysts had expected the unemployment rate to slip to 7.5% last month. 

The numbers quashed expectations for the Federal Reserve to begin tapering its USD85 billion monthly bond-buying program in the near future, which seeks to spur recovery by keeping long-term interest rates low.

The Fed is due to meet in September to discuss policy anew, though expectations began to build that monetary authorities may wait until December to begin tapering the stimulus program and let the economy stand on its own.

Investors stuck with stocks on Friday amid sentiments that Wall Street will enjoy monetary support for longer than once expected.

Leading Dow Jones Industrial Average performers included Hewlett-Packard, up 2.94%, DuPont, up 2.50%, and Home Depot, up 2.01%.

The Dow Jones Industrial Average’s worst performers included UnitedHealth Group, down 1.31%, Chevron, down 1.21%, and Coca-Cola, down 0.84%.

European indices, meanwhile, finished mixed.

After the close of European trade, the EURO STOXX 50 rose 0.08%, France’s CAC 40 rose 0.07%, while Germany’s DAX 30 finished down 0.05%. Meanwhile, in the U.K. the FTSE 100 finished down 0.51%.

Forex

The dollar weakened against most major currencies on Friday after official data released earlier revealed that the U.S. economy added far fewer jobs in July than markets were expecting.

In U.S. trading on Friday, EUR/USD was up 0.57% at 1.3283.

Meanwhile in the euro zone, official data showed that the number of unemployed people in Spain fell for the fifth consecutive month in July, declining by 64,900 after a 127,200 fall the previous month. 

Analysts had expected the number of unemployed people to fall by 80,000 last month.

London-based Markit research group reported earlier that its U.K. construction purchasing managers’ index rose to 57.0 in July from 51.0 in June, blowing past expectations for a rise to 51.5 and expanding at the fastest pace since July 2010. 

A separate report showed that house price inflation in the U.K. rose 0.8% last month, more than the expected 0.4% gain after an increase of 0.3% in June.

The dollar was down against the yen, with USD/JPY down 0.59% at 98.95, and down against the Swiss franc, with USD/CHF trading down 0.86% at 0.9286.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.41% at 1.0388, AUD/USD down 0.20% at 0.8908 and NZD/USD trading down 0.61% at 0.7844.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.52% at 82.00.

The pound shot up against the dollar on Friday after U.S. jobs numbers disappointed, while U.K. construction figures surprised on the upside.

In U.S. trading on Friday, GBP/USD was trading at 1.5288, up 1.12%, up from a session low of 1.5103 and off from a high of 1.5308.

Cable was likely to find support at 1.5103, the earlier low, and resistance at 1.5413, Monday’s high.

The pound, meanwhile, was up against the euro and up against the yen, with EUR/GBP down 0.54% at 0.8690 and GBP/JPY up 0.49% at 151.23.

Gold

Gold prices bounced up after official data revealed the U.S. economy created far fewer jobs in July than expected, though profit takers trimmed gains and flattened prices in mid-morning trading on Friday.

The numbers stoked expectations that the Federal Reserve may put off tapering monetary stimulus programs, such USD85 billion in monthly asset purchases, which weaken the dollar to spur recovery, making gold an attractive hedge.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,311.65 during U.S. afternoon hours, up 0.03%.

The December contract settled down 0.14% at USD1,311.20 a troy ounce on Thursday.

Gold futures were likely to find support at USD1,269.45 a troy ounce, the low from July 17, and resistance at USD1,339.15, Wednesday’s high.

Elsewhere on the Comex, silver for September delivery was up 1.385% at USD19.888 a troy ounce, while copper for September delivery was up 0.43% and trading at USD3.180 a pound.

Oil

U.S. crude oil prices fell on Friday after Washington reported that the world’s largest economy added fewer jobs than expected in July.

On the New York Mercantile Exchange, light sweet crude futures for delivery in September traded at USD107.19 a barrel during U.S. trading, down 0.65%. 

The September contract settled up 2.72% at USD107.89 a barrel on Thursday.

Crude saw some support on sentiments that a weak jobs report may prompt the Federal Reserve to keep stimulus programs in place longer than expected, which should keep the dollar weak.

A weaker greenback tends to make oil an attractive commodity on dollar-denominated exchanges.

On the ICE Futures Exchange, Brent oil futures for September delivery were down 0.45% at USD109.05 a barrel, up USD1.86 from its U.S. counterpart.

Natural Gas

Natural gas prices extended Thursday’s declines into Friday after official data revealed that U.S. inventories rose more than expected last week.

On the New York Mercantile Exchange, natural gas futures for delivery in September traded at USD3.363 per million British thermal units during U.S. afternoon trading, down 0.72%.

The September contract settled down 1.71%, at USD3.387 per million British thermal units on Wednesday.

The U.S. Energy Information Administration said in its weekly report on Thursday that natural gas storage in the U.S. in the week ending July 26 rose by 59 billion cubic feet, above market expectations for an increase of 56 billion cubic feet.

The numbers sent prices tumbling on Thursday, with losses carrying over into Friday’s session.

Inventories rose by 28 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a build of 47 billion cubic feet.

Total U.S. natural gas storage stood at 2.845 trillion cubic feet as of last week. Stocks were 368 billion cubic feet less than last year at this time and 34 billion cubic feet below the five-year average of 2.879 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 119 billion cubic feet below the five-year average, following net injections of 44 billion cubic feet. 

Stocks in the Producing Region were 55 billion cubic feet above the five-year average of 979 billion cubic feet after a net injection of 9 billion cubic feet.

Elsewhere, weather forecasts continued to call for normal to below-normal temperatures for portions of the eastern U.S. over the next week, which pressured prices down as well.

Milder summertime temperatures send prices falling on sentiments that demand for natural gas will decrease at the country’s thermal power plants as fewer businesses and households crank up their air conditioning.

Natural gas accounts for about a quarter of U.S. electricity generation.