Investing.com Weekly Wrap-Up 24 January 2014

by Investing.com Staff, Investing.com

U.S. stocks plummet on global selloff; Dow nosedives 1.96%

U.S. stocks plummeted on Friday as part of a global selloff fueled by concerns that emerging markets may be cooling, which sparked a risk-off trading session marked by demand for safe-haven currencies, the yen namely.

At the close of U.S. trading, the Dow Jones Industrial Average fell 1.96%, the S&P 500 index fell 2.09%, while the Nasdaq Composite index fell 2.15%.

Ruffled feathers in global stock markets, the product of weak Chinese data and fears that emerging markets are facing headwinds, sent investors ditching U.S. stocks on Friday and jumping to the sidelines.

A preliminary Chinese HSBC Manufacturing PMI released earlier this week fell to 49.6 for January from 50.5 in December, missing market calls for an uptick to 50.6.

A reading under 50 signifies contraction, and the numbers spooked investors with concerns that emerging-market economies may grow less.

Investors fleeing risk avoided U.S. stocks on sentiments many countries carry exposure to emerging markets.

Elsewhere, Microsoft released earnings that beat expectations, while consumer products giant Procter & Gamble missed many analysts’ expectations though the company said it was sticking with 2014 revenue forecasts.

Leading Dow Jones Industrial Average performers included Microsoft, up 2.19%, Procter & Gamble, up 1.23%, and Merck, up 0.90%.

The Dow Jones Industrial Average’s worst performers included 3M, down 3.33%, General Electric, down 3.31%, and Boeing, down 3.23%.

European indices, meanwhile, finished lower.

After the close of European trade, the EURO STOXX 50 fell 2.95%, France’s CAC 40 fell 2.79%, while Germany’s DAX 30 fell 2.48%. Meanwhile, in the U.K. the FTSE 100 finished down 1.62%.

Forex

The greenback traded mixed against most major currencies on Friday, buoyed by expectations for the Federal Reserve to continue tapering its monthly bond-buying program though lower as investors flocked to the yen amid a stock-market selloff.

U.S. trading on Tuesday,EUR/USD was down 0.11% at 1.3682.

Solid economic indicators out of Europe recently sent the single currency to levels ripe for profit taking on Friday.

The euro zone’s composite output index rose to a 31-month high of 53.2 in January, up from a final reading of 52.1 in December, according to industry data released Thursday, which bolstered the euro.

Panic in global stock markets, the product of weak Chinese data and fears that emerging markets are facing headwinds, sent investors ditching high-yielding currencies on Friday.

Investors fleeing risk in emerging markets avoided U.S. equities as well and sought safety in the yen over the dollar, though the greenback did see support on Fed expectations.

The Federal Reserve will meet next week to address monetary policy, and markets were expecting monetary authorities to trim USD10 billion from the U.S. central bank’s USD75 billion monthly bond-buying program, though the U.S. central bank will likely keep its language on the dovish side.

The greenback was up against the pound, with GBP/USD down 0.81% at 1.6503.

In the U.K. earlier, the British Bankers’ Association said mortgage approvals rose by GBP46,500 in December, less than the expected 47,200 increase, after an upwardly revised 45,400 rise the previous months.

The dollar was down against the yen, with USD/JPY down 0.94% at 102.31, and down against the Swiss franc, with USD/CHF down 0.30% at 0.8946.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.27% at 1.1070, AUD/USD down 0.71% at 0.8706 and NZD/USD down 0.65% at 0.8248.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.03% at 80.54.

U.S. trading on Friday, EUR/USD was down 0.66% at 1.3530.

Data released earlier showed that U.S. housing starts rose dropped 9.8% and came in at 999,000 units in December from an upwardly revised 1.107 million units in November.

GOLD

Gold prices inched up on Friday after a global stock-market selloff sent investors snapping up nicely priced positions in the yellow metal even on expectations for the Federal Reserve to trim its monthly bond-buying program next week.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,263.40 a troy ounce during U.S. trading, up 0.09%, up from a session low of USD1,256.90 and off a high of 1,272.50.

The February contract settled up 1.91% at USD1,262.30 on Thursday.

Futures were likely to find support at USD1,231.30 a troy ounce, Thursday’s low, and resistance at USD1,272.50, the earlier high.

Investors fleeing risk in emerging markets saw gold as an attractive venue, though the yellow metal did come off earlier highs.

The Federal Reserve will meet next week to address monetary policy, and markets were expecting monetary authorities to trim USD10 billion from the U.S. central bank’s USD75 billion monthly bond-buying program, which moved gold off earlier highs.

Still, consensus that policy will remain loose with tapering coming gradually kept prices higher.

Meanwhile, silver for March delivery was down 0.87% and trading at USD19.835 a troy ounce, while copper futures for March delivery were down 0.49% and trading at USD3.269 a pound.

Oil

Oil prices fell on Friday on fears emerging-market economies may be cooling and demand less fuel and energy going forward.

On the New York Mercantile Exchange, West Texas Intermediate crude for delivery in March traded at USD96.88 a barrel during U.S. trading, down 0.45%. New York-traded oil futures hit a session low of USD96.26 a barrel and a high of USD97.80 a barrel.

The March contract settled up 0.61% at USD97.32 a barrel on Thursday.

Nymex oil futures were likely to find support at USD93.66 a barrel, Monday’s low, and resistance at USD97.83 a barrel, Thursday’s high.

Better-than-expected data on U.S. housing starts sent oil prices gaining on Friday after investors viewed the numbers as another indication of a more robust U.S. economy, one that will demand more fuel and energy going forward.

The weak preliminary Chinese HSBC Manufacturing PMI reading spooked investors with concerns that emerging-market economies may grow less than expected and demand less crude.

Bullish U.S. supply data released Thursday cushioned losses.

The U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories rose by 990,000 barrels in the week ended Jan. 17, outpacing expectations for an increase of 588,000 barrels, while total motor gasoline inventories increased by 2.1 million barrels, broadly in line with market expectations.

Inventories of distillates, which include diesel fuel and heating oil, fell by 3.2 million barrels compared to market calls for a loss of 851,000, which supported crude prices on Friday.

Prices also enjoyed support on reports that the Keystone XL pipeline linking Cushing, Oklahoma, to the U.S. Gulf Coast began making deliveries this week, which should ease bottlenecks that have depressed prices at times.

Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for March delivery were up 0.27% and trading at USD107.88 a barrel, while the spread between the Brent and U.S. crude contracts stood at USD11.00 a barrel.

Natural Gas

Natural gas futures soared to highs not seen since 2010 on Friday after updated weather-forecasting called for fresh blasts of cold air to sweep across the U.S. and hike demand for heating.

On the New York Mercantile Exchange, natural gas futures for delivery in February traded at USD4.998 per million British thermal units during U.S. trading, up 5.66%. The commodity hit session high of USD5.025 and a low of USD4.814.

The February contract settled up 0.87% on Thursday to end at USD4.730 per million British thermal units.

Natural gas futures were likely to find support at USD4.684 per million British thermal units, the earlier low, and resistance at USD5.190, the high from June 18, 2010.

A recent blast of cold air that dumped snow across the eastern U.S. will see reinforcements through the end of January, while early February will see fresh blasts of cold air as well.

Bullish speculators spent the session betting that colder weather will increase demand for the heating fuel.

This week’s supply data sent prices up as well.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended Jan. 17 fell by 107 billion cubic feet, just shy of market expectations for a decline of 110 billion cubic feet but enough to send prices rising on sentiments that below-normal temperatures have been increasing demand for the commodity.

Total U.S. natural gas storage stood at 2.423 trillion cubic feet. Stocks were 598 billion cubic feet less than last year at this time and 369 billion cubic feet below the five-year average of 2.792 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 253 billion cubic feet below the five-year average, following net withdrawals of 67 billion cubic feet.

Stocks in the Producing Region were 75 billion cubic feet below the five-year average of 962 billion cubic feet after a net withdrawal of 25 billion cubic feet.