Investing.com Weekly Wrap-Up 30 August 2013

by Investing.com Staff, Investing.com

U.S. stocks fall on rekindling Syrian concerns; Dow down 0.21%

U.S. stocks fell on Friday after the U.S. government laid out a case to launch limited military strikes against Syria though no plans are etched in stone as of now.

At the close of U.S. trading, the Dow Jones Industrial Average finished down 0.21%, the S&P 500 index fell 0.32%, while the Nasdaq Composite index fell 0.84%.

Earlier Friday, U.S. Secretary of State John Kerry said the U.S. and others were confident Syria recently used chemical weapons in its civil war though President Barack Obama said any decision to attack, if taken, would be swift and narrow with no boots on the ground in Syria.

Stocks fell on the news, as President Obama stressed no plans to attack have been made, and uncertainty over the fallout of a possible unilateral military move by the U.S. repelled investors away from risk-on equity positions.

Elsewhere, the Thomson Reuters/University of Michigan revised consumer sentiment index for August rose to 82.0. from a reading 80.0 in July, beating expectations for an uptick to 80.5. 

Also in the U.S., a widely-watched Chicago purchasing managers’ index rose to 53.0 this month from 52.3 in July, in line with expectations. 

The indicators drew muted applause on Wall Street, as the data rekindled expectations that the Federal Reserve may begin to taper its USD85 billion monthly bond-buying program in September as opposed to later in the year.

Stimulus tools such as Federal Reserve asset purchases bolster stock prices by driving down interest rates, and talk of their dismantling often repels investors away from equities by fueling uncertainty as to how markets will react without monetary support. 

Also Friday, the Bureau of Economic Analysis revealed that personal spending rose slightly less than expected in July, expanding 0.1% after an upwardly revised 0.6% increase the previous month. Analysts were expecting personal spending to rise 0.3% last month. 

Leading Dow Jones Industrial Average performers included Procter & Gamble, up 0.75%, Wal-Mart Stores, up 0.70%, and AT&T, up 0.51%.

The Dow Jones Industrial Average’s worst performers included Alcoa, down 1.41%, UnitedHealth Group, down 1.01%, and Boeing, down 1.00%.

European indices, meanwhile, finished lower.

After the close of European trade, the EURO STOXX 50 fell 1.13%, France’s CAC 40 fell 1.32%, while Germany’s DAX 30 finished down 1.12%. Meanwhile, in the U.K. the FTSE 100 finished down 1.08%.

U.S. markets will be closed on Monday for the country’s Labor Day holiday.

Forex

The dollar rose against most major currencies on Friday after the U.S. laid out a case to attack Syria with limited missile strikes, while solid U.S. economic indicators bolstered the greenback as well.

In U.S. trading on Friday, EUR/USD was down 0.19% at 1.3216.

Expectations of the Fed tapering QE asset purchases rebounded on Friday, as well as geopolitical concerns (Syria) both served to strengthen the dollar.

Across the Atlantic in the euro zone, official data revealed that the bloc’s consumer price index expanded 1.3% in August compared to 1.6% in July, just shy of market expectations for a 1.4% inflation rate

The euro zone’s unemployment rate remained unchanged at 12.1% in July, in line with expectations.

The greenback was up against the pound, with GBP/USD down 0.08% at 1.5493.

The dollar was down against the yen, with USD/JPY down 0.20% at 98.16, and down against the Swiss franc, with USD/CHF trading down 0.05% at 0.9305.

While the dollar rose against most other currencies, it weakened against the yen.

Past and present rounds of Federal Reserve asset purchases have weakened the dollar and strengthened emerging-market currencies, though fears have grown that an end to ultra-loose monetary policies in the U.S. may roil currencies elsewhere, which sparked safe-haven demand for the liquid yen on Friday.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.02% at 1.0537, AUD/USD down 0.32% at 0.8901 and NZD/USD trading down 0.47% at 0.7734.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.13% at 82.12.

Gold

Gold prices fell on Friday after a batch of U.S. economic indicators met or exceeded expectations and sent the dollar firming.

Uncertainty over whether the U.S. will launch missile and air strikes against Syria weakened gold by fueling dollar demand,.

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

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,394.20 during U.S. afternoon hours, down 1.32%.

Gold prices hit a session low of USD1,392.10 a troy ounce and high of USD1,411.10 a troy ounce.

Gold futures were likely to find support at USD1,389.50 a troy ounce, Monday’s low, and resistance at USD1,433.50, Wednesday’s high.

The December contract settled down 0.42% at USD1,412.90 a troy ounce on Thursday.

Elsewhere on the Comex, silver for December delivery was down 2.74% at USD23.478 a troy ounce, while copper for September delivery was down 0.77% and trading at USD3.236 a pound.

Oil

Crude oil futures made hefty swings on Friday after U.S. Secretary of State John Kerry said Washington was confident Syria recently used chemical weapons in its civil war and left markets weighing the possibility of a unilateral military strike against war-torn Middle East country.

On the New York Mercantile Exchange, light sweet crude futures for delivery in October traded at USD108.08 a barrel during U.S. trading, down 0.66%. 

The October contract settled down 1.18% at USD108.80 a barrel on Thursday.

The commodity hit a session low of USD106.78 and a high of USD108.74.

Oil prices moved in a whipsaw fashion after Secretary of State Kerry said the U.S. has “high confidence” that Syria has used chemical weapons in its civil war and added that U.N. inspectors will only determine whether such weapons were used and but not discover who used them.

On the ICE Futures Exchange, Brent oil futures for October delivery were down 0.54% at USD114.54 a barrel, up USD6.46 from its U.S. counterpart.

Natural Gas

Natural gas prices extended Thursday’s losses into Friday after official U.S. data revealed that the country’s stockpiles rose more than expected last week.

Weather forecasts for milder temperatures pressured prices lower as well.

On the New York Mercantile Exchange, natural gas futures for delivery in October traded at USD3.587 per million British thermal units during U.S. trading, down 0.87%. The October contract settled up 1.01% at USD3.618 per million British thermal units on Thursday.

The commodity hit a session low of USD3.586 and a high of USD3.652.

Updated weather forecasting models called for normal to below-normal temperatures to hover over much of the eastern U.S. through the middle of September, which sent prices falling

Demand for natural gas tends to wane at the country’s thermal power plants as temperatures fall, as homes and businesses throttle back on their air conditioners.

Supply data released Thursday dampened prices as well.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ending Aug. 23 rose by 67 billion cubic feet, above market expectations for an increase of 63 billion cubic feet.

Inventories increased by 64 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a build of 66 billion cubic feet.

Total U.S. natural gas storage stood at 3.130 trillion cubic feet as of last week. Stocks were 235 billion cubic feet less than last year at this time and 45 billion cubic feet above the five-year average of 3.085 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 107 billion cubic feet below the five-year average, following net injections of 49 billion cubic feet. 

Stocks in the Producing Region were 95 billion cubic feet above the five-year average of 978 billion cubic feet after a net injection of 16 billion cubic feet. 

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