Investing.com Weekly Wrap-Up 06 September 2013

by Investing.com Staff, Investing.com

U.S. stocks end flat on Syria concerns, soft jobs report; Dow down 0.10%

U.S. stocks finished Friday largely flat after a volatile session that saw concerns brew over a U.S. standoff with Russia over Syria, while a weak jobs report left the fate of monetary stimulus programs up in the air.

At the close of U.S. trading, the Dow Jones Industrial Average finished down 0.10%, the S&P 500 index rose 0.01%, while the Nasdaq Composite index rose 0.03%.

The U.S. earlier continued to press its case for military strikes against Syria for its alleged use of chemical weapons, though Russia countered on Friday that it would stand by its ally Damascus in the event of an attack from the West, which spooked investors in equities markets.

While not a major producer of crude, Syria is an ally of oil-rich Iran as well as Russia, and fears persist a U.S. military strike could engulf the entire Middle East and even beyond and threaten global economic stability and send oil prices soaring.

Elsewhere, the U.S. Labor Department reported earlier that the economy added 169,000 jobs in August, less than market calls for a 180,000 increase.

July’s figure was revised down to 104,000 from 162,000, while June’s figure was revised down to 172,000 from 188,000.

The private sector added 152,000 jobs in August, well beneath expectations for a 180,000 rise.

The U.S. unemployment rate fell to 7.3% in August from 7.4% in July, as more people left the workforce. Analysts were expecting the unemployment rate to remain unchanged last month.

The data fueled sentiments that the Federal Reserve may hold off on announcing plans to begin winding down its USD85 billion in monthly bond purchases at its Sept. 17-18 policy meeting.

Such stimulus tools weaken the greenback to spur recovery by driving down long-term interest rates, which sends stock prices rising, and talk of the Federal Reserve keeping its asset-purchasing program in place for longer than once expected can bolster stock prices.

Leading Dow Jones Industrial Average performers included Hewlett-Packard, up 1.36%, JPMorgan Chase, up 0.86%, and Alcoa, up 0.64%.

The Dow Jones Industrial Average’s worst performers included DuPont, down 0.87%, IBM, down 0.64%, and Verizon, which was also down 0.64%.

European indices, meanwhile, finished higher.

After the close of European trade, the EURO STOXX 50 rose 0.89%, France’s CAC 40 rose 1.06%, while Germany’s DAX 30 finished up 0.49%. Meanwhile, in the U.K. the FTSE 100 finished up 0.23%.

Forex

The dollar softened against most major currencies on Friday after a disappointing U.S. August jobs report doused expectations for the Federal Reserve to begin tapering stimulus programs this month.

Stimulus programs such as the Fed’s USD85 million in monthly asset purchases weaken the dollar to spur recovery, and talk of their staying in place – often the product of disappointing U.S. data – can soften the greenback.

In U.S. trading on Friday, EUR/USD was up 0.45% at 1.3179.

The weaker than expected U.S. employment report was a major factor Friday. Analysts were expecting the unemployment rate to remain unchanged last month, and the jobs report sent the dollar falling by dampening expectations for the Federal Reserve announce at its Sept. 17-18 policy meeting a decision to begin winding down asset purchases.

Soft German data capped the euro’s gains.

Germany reported that industrial production in Europe’s largest economy contracted by 1.7% in July, well beyond expectations for a 0.5% fall after a downwardly revised 2% increase in June.

A separate report revealed that Germany’s trade surplus narrowed unexpectedly to EUR14.5 billion in July from an upwardly revised June surplus of EUR15.8 billion. Analysts were expecting the trade surplus to expand to EUR16.1 billion in July.

The greenback was down against the pound, with GBP/USD up 0.27% at 1.5632.

Official data released earlier revealed that U.K. manufacturing production rose 0.2% in July, missing expectations for a 0.3% rise after an upwardly revised 2% increase the previous month.

A separate report showed that the U.K. trade deficit widened to GBP9.85 billion in July, from a downwardly revised GBP8.17 billion deficit the previous month. Analysts had expected the trade deficit to narrow to GBP8.15 billion in July.

U.K. industrial production came in flat in July, missing expectations for a 0.1% gain, though soft

The dollar was down against the yen, with USD/JPY down 0.98% at 99.12, and down against the Swiss franc, with USD/CHF trading down 0.75% at 0.9380.

The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.97% at 1.0403, AUD/USD up 0.69% at 0.9185 and NZD/USD trading up 1.48% at 0.8001.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.60% at 82.18.

Gold

Gold prices spiked on Friday after the U.S. August jobs report disappointed investors and quashed expectations for many that Federal Reserve will announce plans to taper stimulus programs this month.

Stimulus programs such as the Fed’s USD85 billion in monthly asset purchases weaken the dollar to spur recovery, which makes gold an attractive hedge.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,386.80 during U.S. afternoon hours, up 1.01%.

Gold prices hit a session low of USD1,361.80 a troy ounce and high of USD1,392.70 a troy ounce.

Gold futures were likely to find support at USD1,361.80 a troy ounce, the earlier low, and resistance at USD1,416.30, Tuesday’s high.

The December contract settled down 1.22% at USD1,373.00 a troy ounce on Thursday.

Elsewhere on the Comex, silver for December delivery was up 2.61% at USD23.862 a troy ounce, while copper for December delivery was up 0.49% and trading at USD3.260 a pound.

Oil

Crude oil futures spiked on Friday after the U.S. and Russia sparred over Syria, while a soft U.S. jobs report bolstered the commodity by rekindling expectations for the Federal Reserve to continue stimulating the economy via asset purchases, which are bullish for crude.

On the New York Mercantile Exchange, light sweet crude futures for delivery in October traded at USD110.38 a barrel during U.S. trading, up 1.85%.

The October contract settled down 1.08% at USD104.76 a barrel on Thursday.

The commodity hit a session low of USD108.13 and a high of USD110.34.

The U.S. earlier continued to press its case for military strikes against Syria for its alleged use of chemical weapons, though Russian countered on Friday that it would stand by its ally Damascus in the event of an attack from the West.

While not a major producer of crude, Syria is an ally of oil-rich Iran as well as Russia, and fears persist a U.S. military strike could engulf the entire Middle East and even beyond and threaten global supply.

Weaker than expected U.S. employment data fueled sentiments that the Federal Reserve may hold off announcing plans to begin winding down its USD85 billion in monthly bond purchases at its Sept. 17-18 policy meeting.

Such stimulus tools weaken the greenback to spur recovery, which in turn bolster oil prices by making the commodity an attractive buy in dollar-denominated exchanges.

On the ICE Futures Exchange, Brent oil futures for October delivery were up 0.78% at USD116.16 a barrel, up USD5.78 from its U.S. counterpart.

Natural Gas

Natural gas prices extended Thursday’s losses into Friday as investors avoided the commodity after official U.S. data revealed the nation’s inventories rose more than expected last week.

On the New York Mercantile Exchange, natural gas futures for delivery in October traded at USD3.540 per million British thermal units during U.S. trading, down 0.99%. The October contract settled down 2.93% at USD3.575 per million British thermal units on Wednesday.

The commodity hit a session low of USD3.534 and a high of USD3.595.

The U.S. Energy Information Administration said in its weekly report that natural gas stockpiles rose by 58 billion cubic feet in the week ending Aug. 30, more than an expected 54 billion increase after a 67 billion rise the previous week.

The numbers sent prices falling by stoking concerns supplies may be outstripping demand.

A quieter Atlantic Ocean softened prices as well.

The U.S. National Hurricane Center said Friday that Tropical Storm Gabrielle dissipated into a remnant low pressure, while a tropical weather system over the southwestern Gulf of Mexico will likely come ashore before it has time to strengthen into a cyclone

Tropical weather systems often disrupt production by prompting gas rig operators to evacuate offshore facilities.

The Gulf of Mexico is home to 10% of U.S. natural gas production.

Elsewhere, forecasts for above-normal temperatures across parts of the eastern U.S. through mid-September curbed losses somewhat.

Demand for natural gas tends to rise amid heat waves, as homes and businesses throttle up their air conditioners.

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