Investing.com Weekly Wrap-Up 04 July 2014

European stocks hold steady in quiet trade; Dax down 0.03%

by Investing.com Staff, Investing.com

European stocks held steady in quiet trade on Friday, after strong gains were posted on Thursday following comments by European Central Bank President Mario Draghi and as downbeat German factory data weighed.

During European afternoon trade, the DJ Euro Stoxx 50 fell 0.15%, France’s CAC 40 eased 0.05%, while Germany’s DAX dipped 0.03%.

European equities strengthened on Thursday after ECB President Mario Draghi reiterated the bank’s forward guidance that rates will remain on hold at present or lower levels for an extended period.

He emphasized that “the governing council is also unanimous in its commitment to use unconventional instruments’ if necessary, to address the risk of too-prolonged period of low inflation.”

Earlier Friday, official data showed that German factory orders dropped 1.7% in May, compared to expectations for a 1.0% decline, after an increase of 3.4% in April, whose figure was revised up from a previously estimated 3.1% rise.

Financial stocks pushed broadly lower, as French lenders Societe Generale (PARIS:SOGN) and BNP Paribas (PARIS:BNPP) plummeted 1.77% and 1.72%, while Germany’s Commerzbank (XETRA:CBKG) and Deutsche Bank (XETRA:DBKGn) tumbled 1.82% and 1.18%.

Among peripheral lenders, Intesa Sanpaolo (MILAN:ISP) and Unicredit (MILAN:CRDI) plunged 2.26% and 2.31% respectively, while Spanish banks BBVA (MADRID:BBVA) and Banco Santander (MADRID:SAN) declined 0.78% and 1.04%.

Elsewhere, Alstom (PARIS:ALSO) jumped 1.71% even after France’s stock market regulator, the Autorité des Marchés Financiers, ruled on Thursday that the government had unwittingly forged a shareholders’ pact with Bouygues (PARIS:BOUY) when it agreed last month to buy up to 20% of Alstom.

In London, commodity-heavy FTSE 100 inched up 0.06%, although losses in the mining sector limited gains.

Shares in Bhp Billiton (LONDON:BLT) edged down 0.08% and Rio Tinto (LONDON:RIO) slid 0.33%, while Fresnillo (LONDON:FRES) declined 0.38%.Financial stocks also remained mostly lower, as HSBC Holdings (LONDON:HSBA) edged down 0.18% and Lloyds Banking (LONDON:LLOY) dropped 0.52%, while the Royal Bank of Scotland (LONDON:RBS) retreated 0.84%. Barclays (LONDON:BARC) continued to overperform on the other hand, up 0.33%.

Meanwhile, Easyjet (LONDON:EZJ) remained one of the top performers on the index, up 1.85%. The airliner made headlines on Thursday, after it was fined €60,000 for refusing to let a partially paralysed woman fly unaccompanied to her son’s funeral.

In the U.S., markets were closed for the fourth of July holiday. The Thursday market close for the U.S. can be read here.

Forex

The dollar was little changed against the other major currencies in light trade on Friday, as Thursday’s upbeat U.S. employment data continued to support the greenback.

Trading volumes were expected to remain thin on Friday, as U.S. markets were to remain closed for the fourth of July holiday.

The dollar was higher against the euro, with EUR/USD down 0.17% to 1.3588.

The greenback remained supported after the Labor Department on Thursday reported that that U.S. economy added 288,000 jobs last month, easily surpassing expectations for an increase of 212,000, and that the U.S. unemployment rate fell to 6.1% from 6.3% in May, the lowest in almost six years.

The single currency came under pressure on Thursday after ECB President Mario Draghi reiterated the bank’s forward guidance that rates will remain on hold at present or lower levels for an extended period.

He emphasized that “the governing council is also unanimous in its commitment to use unconventional instruments’ if necessary, to address the risk of too-prolonged period of low inflation.”

Earlier Friday, official data showed that German factory orders dropped 1.7% in May, compared to expectations for a 1.0% decline, after an increase of 3.4% in April, whose figure was revised up from a previously estimated 3.1% rise.

The pound was steady against the dollar, with GBP/USD dipping 0.03% to 1.7150.

The dollar was lower against the yen, with USD/JPY edging down 0.10% to 102.08 and higher against the Swiss franc, with USD/CHF up 0.20% to 0.8950.

The greenback was steady to higher against the Australian, New Zealand and Canadian dollars, with AUD/USD up 0.07% to 0.9353, NZD/USD slipping 0.12% to 0.8743 and USD/CAD inching up 0.03% to 1.0637.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.10% to 80.33.

Commitments of Traders data from the CFTC (Commodity Future Trading Commission) showed relatively minor moves of sentiment this week. The euro and Japanese yen remained strongly bearish; British pound, Australian dollar and Mexican peso remained strongly bullish. All sentiment is relative to the U.S. dollar.

Gold

Gold futures edged higher on Friday, but gains were expected to remain limited as Thursday’s upbeat U.S. employment data continued to lend support to the U.S. dollar.

The August contract settled 0.77% lower on Thursday to end at $1,320.6 a troy ounce.

Gold futures were likely to find support at $1,309.40 an ounce, Thursday’s low and resistance at $1,333.20, the high from July 7.

On Thursday, the U.S. Department of Labor said non-farm payrolls rose by 288,000 last month, easily surpassing expectations for an increase of 212,000. The previous month’s figure was revised up to a gain of 224,000 from a previously reported increase of 217,000.

The unemployment rate ticked down to a four-and-a-half year low of 6.1% from 6.3% in May. Analysts had expected the jobless rate to hold steady at 6.3% last month.

The upbeat jobs report fuelled optimism over the strength of the labor market and bolstered the outlook for the broader economic recovery.

Separately, the Institute of Supply Management said its non-manufacturing purchasing manager’s index fell to 56.0 last month from a reading of 56.3 in May. Analysts had expected the index to hold steady at 56.3 in June.

Trading volumes were expected to remain thin on Friday, as U.S. markets were to remain closed for the fourth of July holiday.

Elsewhere on the Comex, silver for September delivery inched rose 0.24% to trade at $21.188 a troy ounce, while copper for September delivery slid 0.38% to trade at $3.268 a pound.

Oil

Crude oil futures were trading near one-month lows on Friday, as concerns over potential supply disruptions in the Middle East began to subside.

On the New York Mercantile Exchange, U.S. crude oil for delivery in August traded at $103.98 a barrel during European morning trade, down 0.08%.

Prices dropped 0.40% on Thursday to settle at $104.06.

Futures were likely to find support at $103.97 a barrel, the low from June 11 and resistance at $105.53, the high from July 7.

Oil prices came under pressure amid expectations for more shipments from Libya and Iran, although ongoing concerns over violence in Iraq were expected to limit losses.

Investors were also focusing on talks between Iran and world powers to end the dispute over its controversial nuclear program. Teheran has reduced demands for the size of its future nuclear enrichment program although the West is urging for further compromise.

Elsewhere, on the ICE Futures Exchange, Brent oil for August inched up 0.05% to trade at $111.06 a barrel, with the spread between the Brent and crude contracts standing at $7.08 a barrel.

Natural Gas

Natural gas futures rose on Thursday after a weekly U.S. supply report met market expectations.

On the New York Mercantile Exchange, natural gas futures for delivery in August traded at $4.368 per million British thermal units during U.S. trading, up 0.24%. The commodity hit a session high of $4.409 and a low of $4.331.

The August contract settled down 2.20% on Wednesday to end at $4.357per million British thermal units.

Natural gas futures were likely to find support at $4.289 per million British thermal units, the low from May 18, and resistance at $4.608, Thursday’s high.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ending on June 27 rose by 100 billion cubic feet, in line with expectations.

The five-year average change for the week is an increase of 68 billion cubic feet.

Total U.S. natural gas storage stood at 1.929 trillion cubic feet. Stocks were 666 billion cubic feet less than last year at this time and 790 billion cubic feet below the five-year average of 2.719 trillion cubic feet for this time of year.

Natural gas stockpiles have grown by 100 or more billion cubic feet for eight consecutive weeks, a record streak since 1994.

Producers would need to add approximately 2.6 trillion cubic feet to storage by November 1 to meet typical winter demand, according to analysts.