Investing.com Weekly Wrap-Up 10 January 2014

by Investing.com Staff, Investing.com

U.S. mixed on poor jobs report, earnings uncertainty; Dow slides 0.05%

U.S. stocks ended Friday mixed after the U.S. December jobs report disappointed investors though losses were limited over the monetary implications the dismal numbers may bring to equities prices.

At the close of U.S. trading, the Dow Jones Industrial Average fell 0.05%, the S&P 500 index rose 0.23%, while the Nasdaq Composite index rose 0.44%.

The Bureau of Labor Statistics reported earlier that the U.S. economy added 74,000 jobs in December, well below expectations for a 196,000 increase and below an upwardly revised 241,000 rise the previous month.

The U.S. private sector added 87,000 jobs last month, disappointing expectations for 195,000 rise, after an upwardly increase of 226,000 in November.

The report also showed that the U.S. unemployment rate fell to 6.7% in December due to a weak participation rate, down from 7.0% in November. Analysts had expected the rate to remain unchanged last month.

The numbers softened stock prices by stoking fears that U.S. recovery could hit a soft patch, though stocks saw support on expectations for the Federal Reserve to trim its USD75 billion monthly bond-buying program at a slower pace than once expected.

Fed asset purchases aim to spur recovery by suppressing long-term interest rates, making stocks an attractive asset class under such loose monetary policies.

Elsewhere, U.S. metals giant Alcoa kicked off the earnings season with mixed fourth-quarter results.

The company posted a loss of USD0.04 a share, missing market estimates for USD0.06 a share,

Revenue came in at USD5.56 billion, which beat some forecasts.

Retailer Target reported earlier Friday that the number of customers affected by the recent hacking event may total 70-110 million as opposed to an initial estimate of 40 million.

Leading Dow Jones Industrial Average performers included Microsoft, up 1.45%, Caterpillar, up 0.93%, and Intel, up 0.91%.

The Dow Jones Industrial Average’s worst performers included UnitedHealth, down 1.84%, Chevron, also down 1.84%, and General Electric, down 0.99%.

European indices, meanwhile, finished higher.

After the close of European trade, the EURO STOXX 50 rose 0.41%, France’s CAC 40 rose 0.60%, while Germany’s DAX 30 rose 0.55%. Meanwhile, in the U.K. the FTSE 100 finished up 0.73%.

Forex

The greenback slumped against most major currencies on Friday after official data revealed the U.S. economy picked up a fraction of the new jobs in December that markets were expecting, which fanned concerns the Federal Reserve will take its time dismantling stimulus programs.

U.S. trading on Friday, EUR/USD was up 0.43% at 1.3667.

The Bureau of Labor Statistics reported earlier that the U.S. economy added 74,000 jobs in December, well below expectations for a 196,000 increase and below an upwardly revised 241,000 rise the previous month.

The numbers weakened the dollar by fueling expectations for the Federal Reserve to trim its USD75 billion monthly bond-buying program at a slower pace than once expected.

Fed asset purchases tend to weaken the dollar by suppressing long-term interest rates.

Still, sentiments began to build in the session that one disappointing jobs report may not be enough to prompt the Fed to overlook several weeks of positive data as it decides when to scale back asset purchases, which gave the dollar some support.

Talk cold, wintry weather may have prompted businesses to put off hiring also curbed the greenback’s losses.

The euro rose on the disappointing data though it still faced headwinds after ECB President Mario Draghi on Thursday reinforced the bank’s forward guidance on rates and said the bank was still ready to ready to take “further decisive action” if needed.

Draghi reiterated that monetary policy will remain accommodative for as long as is needed in order to assist the economic recovery in the euro area. The ECB expects interest rates to remain at present or lower levels for an extended period of time, he said.

Elsewhere on Friday, official data showed that industrial production in France climbed 1.3% in November, exceeding expectations for a 0.4% rise, after a downwardly revised 0.5% decline the previous month.

The greenback was up against the pound, with GBP/USD down 0.05% at 1.6474.

The dollar was down against the yen, with USD/JPY down 0.76% at 104.05, and down against the Swiss franc, with USD/CHF down 0.40% at 0.9033.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.48% at 1.0894, AUD/USD up 1.08% at 0.8996 and NZD/USD trading up 0.56% at 0.8300.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.38% at 80.76.

GOLD

Gold prices carried Thursday’s gains into Friday on reports of rising physical demand in Asia, while bottom fishers snapped up nicely priced positions after the commodity suffered its worst loss in 2013 in three decades.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,236.60 a troy ounce during U.S. trading, up 0.93%. Gold prices traded in a range between USD1,221.40 a troy ounce and USD1,239.60 a troy ounce.

Futures were likely to find near-term support at USD1,181.90 a troy ounce, the low from Dec. 31, and resistance at USD1,251.40, the high from Dec. 16. The February contract settled 1.90% higher on Thursday to end at USD1,225.20 a troy ounce.

Reports of rising demand for gold bars and jewelry in Asia sent prices spiking on Friday, which brought in bargain hunters who viewed the yellow metal as an attractive buy.

Gold prices fell about 29% in 2013 amid growing expectations that the Federal Reserve will taper its bond purchases in 2014 and possibly end the program later this year.

Earlier Friday, outgoing Fed Chairman Ben Bernanke said any decision to trim the U.S. central bank’s USD75 billion in asset purchases this year shouldn’t be interpreted as a sign that tighter monetary policy is around the corner.

Elsewhere on the Comex, silver futures for March delivery were down 0.12% and trading at USD20.103 a pound, while copper for March delivery was down 0.91% at 3.351.

Oil

Oil prices rose on Friday after a poor U.S. December jobs report fanned expectations for the Federal Reserve to taper its monthly bond-buying program on a very gradual basis, which would elevate crude and other commodities by weakening the greenback.

On the New York Mercantile Exchange, West Texas Intermediate crude for delivery in February traded at USD92.39 a barrel during U.S. morning trade, up 0.80%. New York-traded oil futures hit a session low of USD92.00 a barrel and a high of USD93.35 a barrel.

The February contract settled down 1.43% at USD92.33 a barrel on Wednesday. Nymex oil futures were likely to find support at USD91.25 a barrel, Thursday’s low, and resistance at USD94.58 a barrel, Monday’s high.

Weak employment numbers from the Bureau of Labor Statistics weakened the dollar by fueling expectations for the Federal Reserve to trim its USD75 billion monthly bond-buying program at a slower pace than once expected.

Fed asset purchases tend to weaken the greenback by suppressing long-term interest rates, and a weaker U.S. currency makes oil and other commodities attractive buys on dollar-denominated exchanges.

Oil prices also rose on data revealing that China’s crude imports rose by 13% from a year earlier to a record 6.31 million barrels per day in December.

China is the world’s second biggest oil consumer.

Capping gains, however, were concerns the poor jobs numbers reflected a U.S. economy that is still battling potholes on its road to recovery and may demand less fuel and energy than hoped.

Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for February delivery were up 0.46% to trade at USD106.88 a barrel, while the spread between the Brent and U.S. crude contracts stood at USD14.49 a barrel.

Natural Gas

Natural gas futures rose on Friday on speculation that a recent blast of arctic air will take its toll on U.S. inventories, while forecasts for a warming trend to end soon also pressured prices higher.

On the New York Mercantile Exchange, natural gas futures for delivery in February traded at USD4.072 per million British thermal units during U.S. trading, up 1.66%. The commodity hit session high of USD4.099 and a low of USD3.954.

The February contract settled down 5.00% on Thursday to end at USD4.005 per million British thermal units. Natural gas futures were likely to find support at USD3.951 per million British thermal units, the low from Dec. 5, and resistance at USD4.428, Tuesday’s high.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended Jan. 3 fell by 157 billion cubic feet, towards the lower end of expectations, especially in wake of a blast of cold air that sent temperatures falling to dangerously cold levels in many cities.

Inventories fell by 191 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 131 billion cubic feet.

Total U.S. natural gas storage stood at 2.817 trillion cubic feet.

By Friday, prices rose on sentiments that the cold air mass will reflect more in next week’s inventory report, which gave the commodity room to rise.

Meanwhile, updated weather forecasting models called for a warming trend across much of the U.S. to end next week.

A fresh blast of cold air should return and edge out milder temperatures around Jan. 14, according to Natgasweather.com.