Investing.com Weekly Wrap-Up 04 October 2013

by Investing.com Staff, Investing.com

U.S. stocks gain as market looks past shutdown jitters; Dow gains 0.51%

U.S. stocks rose on Friday as investors locked in expectations for a fiscal impasse in Congress and accompanying government shutdown will be temporary and eventually give way to more robust recovery as the year comes to a close.

The government shutdown entered its fourth day on Thursday.  At the close of U.S. trading, the Dow Jones Industrial Average finished up 0.51%, the S&P 500 index rose 0.71%, while the Nasdaq Composite index rose 0.89%.

While a government shutdown may run through mid October, sentiments that congressional Democrats and Republicans will eventually find a way to fund the government and agree on terms to lift the debt ceiling and steer the country out of the fiscal impasse sent stock prices rising Friday.

The U.S. Treasury Department has estimated will the government will hit its debt ceiling by Oct. 17, though hopes the nation’s policymakers will reach a broad agreement to tackle fiscal impasses sparked a rally on Wall Street.

House Speaker John Boehner, an Ohio Republican, reiterated on Friday that the U.S. will not default on its debts.

Elsewhere, stocks rose in a session previously scheduled to see the release of the U.S. September jobs report.

The Bureau of Labor Statistics said on its web site that it was not collecting data, issuing reports, or responding to public inquiries due to suspension of federal services.

Supporting stocks was a Standard & Poor’s report stating that the debt ceiling debate is unlikely to change its U.S. sovereign rating.

Leading Dow Jones Industrial Average performers included Walt Disney, up 2.01%, Boeing, up 1.67%, and DuPont, up 1.54%.

The Dow Jones Industrial Average’s worst performers included Wal-Mart, down 0.49%, Merck, down 0.27%, and General Electric, down 0.21%.

European indices, meanwhile, finished higher.

After the close of European trade, the EURO STOXX 50 rose 0.83%, France’s CAC 40 rose 0.88%, while Germany’s DAX 30 rose 0.29%. Meanwhile, in the U.K. the FTSE 100 finished up 0.08%

Forex

Bottom fishers snapped up nicely priced dollar positions on Friday amid sentiments that an ongoing U.S. government shutdown sent the greenback falling to attractively affordable levels.

In U.S. trading on Friday, EUR/USD was down 0.48% at 1.3553.

A U.S. government shutdown that began earlier this week due to congressional inability to agree on a spending package pushed the dollar down to levels ripe for bottom fishing on Friday.

The euro hit highs not seen since February earlier in recent sessions, further supporting views that the dollar was oversold in a session previously scheduled to see the release of the U.S. September jobs report.

Markets were also mulling how the U.S. political deadlock will affect negotiations to raise the U.S. debt ceiling, which the U.S. Treasury Department has estimated will be reached by Oct. 17.

International Monetary Fund head Christine Lagarde said earlier that failure to raise the U.S. debt ceiling could hurt the global economy and warned U.S. growth could drop below 2% this year.

Supporting the dollar, however, was a Standard & Poor’s report stating that the debt ceiling debate is unlikely to change its U.S. sovereign rating.

Meanwhile in the euro zone, official data earlier showed that Germany’s producer price index fell 0.1% in August, defying expectations for a 0.1% rise after a 0.1% slip the previous month.

The greenback up against the pound, with GBP/USD down 0.81% at 1.6025.

In the U.K. on Thursday the Markit research firm said its services purchasing manager’s index ticked down to 60.3 in September from 60.5 in August, better than expectations for a decline to 60.0.

A separate report showed that house price inflation in the U.K. rose 0.3% last month, confounding expectations for a 0.5% increase after a downwardly revised 0.3% uptick in August.

The tame data sparked a round of profit-taking that carried into Friday, as investors viewed the pound as due for a breather after hitting recent nine-month highs against the greenback.

The dollar was up against the yen, with USD/JPY up 0.15% at 97.41, and up against the Swiss franc, with USD/CHF up 0.87%at 0.9072.

The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.33% at 1.0298, AUD/USD up 0.36% at 0.9428 and NZD/USD trading up 0.36% at 0.8323.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.45% at 80.22.

Gold

Gold prices moved lower on Friday as investors avoided the precious metal as a government shutdown dragged on with no end in sight and left markets without a key indicator due for release.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,307.90 during U.S. afternoon hours, down 0.74%.

Gold prices hit a session low of USD1,306.40 a troy ounce and high of USD1,324.70 a troy ounce.

Gold futures were likely to find support at USD1,278.20 a troy ounce, Wednesday’s low, and resistance at USD1,375.10, the high from Sept. 19.

The December contract settled down 0.23% at USD1,317.60 a troy ounce on Thursday.

An ongoing U.S. government shutdown prevented the Bureau of Labor Statistics from releasing the September jobs report on Friday.

Unemployment figures drive gold prices by giving markets indications as to when the Federal Reserve will begin unwinding stimulus measures, which have elevated prices for years by weakening the dollar.

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

Elsewhere, many investors began to view the dollar as oversold and snapped up nicely priced greenback positions, which sent gold falling further.

Markets were also considering how the political deadlock will affect negotiations to raise the U.S. debt ceiling, which the U.S. Treasury Department has estimated will be reached by Oct. 17.

Elsewhere on the Comex, silver for December delivery was down 0.34% at USD21.712 a troy ounce, while copper for December delivery was up 1.01% and trading at USD3.302 a pound.

Oil

Crude prices rose on Friday as Tropical Storm Karen continued to bear down on the energy-rich U.S. Gulf Coast prompting oil-rig evacuations ahead of time.

On the New York Mercantile Exchange, light sweet crude futures for delivery in November traded at USD103.50 a barrel during U.S. trading, up 0.18%.

The commodity hit a session low of USD102.89 and a high of USD104.17.

The November contract settled down 0.76% at USD103.31 a barrel on Thursday.

At the time of writing, Karen’s maximum sustained winds were at 50 miles per hour and Tropical Storm Warning flags were flying along the Gulf Coast.

While the storm appeared weaker than in previous forecasts, the system was still strong enough to prompt energy companies to begin evacuating rigs and shut down production.

Capping gains, however, was a U.S. government shutdown that began earlier this week due to congressional inability to agree on a spending package, which kept close to a million government workers off the job and without pay.

Fears the shutdown, fiscal drag and uncertainty in general will weigh on recovery and crimp demand for fuel and energy capped oil’s gains on Friday.

Meanwhile on the ICE Futures Exchange, Brent oil futures for November delivery were up 0.05% at USD109.06 a barrel, up USD5.56 from its U.S. counterpart.

Natural Gas

Natural gas prices rose on Friday as Tropical Storm Karen chugged closer to the energy-rich U.S. Gulf of Mexico coast, prompting offshore rig evacuations ahead of time, which crimps supply.

On the New York Mercantile Exchange, natural gas futures for delivery in November traded at USD3.515 per million British thermal units during U.S. trading, up 0.44%.

The commodity hit a session low of USD3.494 and a high of USD3.535.

The November contract settled down 1.21% at USD3.499per million British thermal units on Thursday.

At the time of writing, Karen’s maximum sustained winds were at 50 miles per hour and Tropical Storm Warning flags were flying along the Gulf Coast.

While the storm appeared weaker than in previous forecasts, the system was still strong enough to prompt energy companies to begin evacuating rigs on Thursday.

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

A bearish supply report capped gains, however.

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 Sept. 27 rose by 101 billion cubic feet, above market expectations for an increase of 94 billion cubic feet.

Inventories increased by 77 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a build of 82 billion cubic feet.

Total U.S. natural gas storage stood at 3.487 trillion cubic feet as of last week. Stocks were 155 billion cubic feet less than last year at this time and 49 billion cubic feet above the five-year average of 3.438 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 102 billion cubic feet above the five-year average of 1.056 billion cubic feet after a net injection of 33 billion cubic feet.