Investing.com Weekly Wrap-Up 01 August 2014

U.S. stocks fall on data, geopolitical concerns; Dow falls 0.42%

by Investing.com Staff, Investing.com

U.S. stocks fell on Friday after investors sold on fears Argentina’s default, the conflict in Ukraine and a soft global recovery don’t support the lofty valuations present on Wall Street in recent trading.

At the close of U.S. trading, the Dow 30 fell 0.42%, the S&P 500 index fell 0.29%, while the NASDAQ Composite index fell 0.39%.

The Volatility S&P 500 index, which measures the outlook for market volatility, was up 0.18% at 16.98.

Argentina this week failed to agree on debt restructuring terms with creditors and fell into its second default since 2002, which rattled nerves on Wall Street due to concerns the global economy could suffer if contagion fears persist, though such fears began to wane later in the session and curbed losses.

Sluggish data out of the U.S. and Europe also kept stocks in negative territory.

The Labor Department reported earlier that the U.S. economy added 209,000 jobs in July, missing expectations for an increase of 233,000.

The report also showed that the U.S. unemployment rate ticked up to 6.2% last month from 6.1% in June. Analysts had expected the rate to remain unchanged in July.

Elsewhere, the revised Thomson Reuters/University of Michigan consumer sentiment index rose to 81.8 in July from 81.3 in June, missing expectations for a reading of 82.0, which added to Friday’s profit taking.

Separately in the U.S., the Institute of Supply Management reported that the U.S. manufacturing purchasing managers’ index rose to 57.1 in July from 55.3 in June, beating expectations for an increase to 56.0, though the number did little to boost spirits on Wall Street.

Meanwhile in Europe, the Markit research group said that Germany’s manufacturing purchasing managers’ index fell to 52.4 last month from 52.9 in June. Analysts had expected the index to remain unchanged.

For the entire euro zone, Markit said the manufacturing PMI ticked down to 51.8 in July, from a reading of 51.9 the previous month. Analysts had also expected the index to remain unchanged.

Separately in Asia, official data showed that China’s manufacturing PMI rose to 51.7 from 51.0 in July, beating market expectations for a 51.4 reading.

Still, China’s HSBC final manufacturing PMI ticked down to 51.7 last month from 52.0. Analysts had expected the index to remain unchanged.

Fears that military conflicts in Ukraine and Gaza also kept investors at bay, as concerns persisted Friday that geopolitical issues will dampen global recovery, as shaky ceasefires in the Middle East and reports of Russian interference in Ukraine dampened demand for risk-on asset classes.

Leading Dow Jones Industrial Average performers included Procter & Gamble Company (NYSE:PG), up 3.01%, General Electric Company (NYSE:GE), up 0.80%, and Pfizer Inc (NYSE:PFE), up 0.57%.

The Dow Jones Industrial Average’s worst performers included J P Morgan Chase & Co (NYSE:JPM), down 2.08%, American Express Company (NYSE:AXP), down 1.76%, and Goldman Sachs Group Inc (NYSE:GS), down 1.53%.

European indices, meanwhile, ended the day lower.

After the close of European trade, the DJ Euro Stoxx 50 fell 1.39%, France’s CAC 40 fell 1.02%, while Germany’s DAX fell 2.10%. Meanwhile, in the U.K. the FTSE 100 fell 0.76%.

Forex

The dollar edged lower against the euro and most other major currencies on Friday after data revealed the U.S. economy picked up fewer payrolls in July than markets were hoping.

In U.S. trading, EUR/USD was up 0.30% at 1.3431, up from a session low of 1.3378 and off a high of 1.3445.

The pair was likely to find support at 1.3367, Wednesday’s low, and resistance at 1.3445, the session high.

Investors avoided the dollar on the weaker than expected employment data to reexamine how much time will pass from when the Federal Reserve will wind down its bond-buying stimulus program and when it will begin hiking benchmark interest rates.

While the economy is improving, the Fed noted in its July statement on interest rates this week that slackness remains in the labor market.

Meanwhile in Europe, the Markit research group said that Germany’s manufacturing purchasing managers’ index fell to 52.4 last month from 52.9 in June. Analysts had expected the index to remain unchanged.

For the entire euro zone, Markit said the manufacturing PMI ticked down to 51.8 in July, from a reading of 51.9 the previous month. Analysts had also expected the index to remain unchanged.

Elsewhere, the euro was up against the pound, with EUR/GBP up 0.62% at 0.7979, and flat against the yen, with EUR/JPY unchanged at 137.64.

Meanwhile in Asia, official data showed that China’s manufacturing PMI rose to 51.7 from 51.0 in July, beating market expectations for a 51.4 reading.

Still, China’s HSBC final manufacturing PMI ticked down to 51.7 last month from 52.0. Analysts had expected the index to remain unchanged, which sent investors flocking to safe-haven positions in gold, which tends to trade inversely with the dollar.

Elsewhere, Argentina defaulted on its debts this week, which sparked fears markets could roil on the event, while concerns that tensions in Ukraine and Gaza will dampen global recovery also boosted demand for the yellow metal.

The dollar was down against the yen, with USD/JPY down 0.20% at 102.59, and down against the Swiss franc, with USD/CHF down 0.29% at 0.9062.

The greenback was up against the pound, with GBP/USD down 0.35% at 1.6828.

Markit Economics reported earlier that its U.K. manufacturing purchasing managers’ index fell to 55.4 last month, down from 57.5 in June. Analysts had expected the index to slip to 57.2 in July, and numbers weakened the pound.

A day earlier on Thursday, the Nationwide Building Society reported that property values rose 0.1% in July from June, missing market calls for a 0.5% reading, which softened the pound.

Property values rose 10.6% on year in July, below expectations for a reading of 11.3%

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.16% at 1.0921, AUD/USD up 0.20% at 0.9313 and NZD/USD up 0.04% at 0.8504.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.16% at 81.41.

Commitments of Traders data from the CFTC (Commodity Future Trading Commission) The euro and Japanese yen remained strongly bearish, with both moving moderately to even more bearish sentiment; the British pound remained strongly bullish, with positive sentiment becoming even stronger. The sentiment for all other currencies was little changed from a week earlier.

Gold

A slew of worries fueled by U.S. and European data, Argentina’s default on its debts and conflict in Ukraine and in the Middle East sent investors rushing to safe-harbor gold positions on Friday.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at 1,264.60 a troy ounce during U.S. trading, up 0.92%, up from a session low of $1,281.50 and off a high of $1,298.00.

The December contract settled down 1.09% at $1,282.80 on Thursday.

Futures were likely to find support at $1,281.30 a troy ounce, Thursday’s low, and resistance at $1,314.60, Monday’s high.

Bad news from across the globe boosted gold prices due to the precious metal’s safe-haven appeal.

Investors avoided the dollar, which moves inversely with gold, on the data to reexamine how much time will past from when the Federal Reserve will wind down its bond-buying stimulus program and when it will begin hiking benchmark interest rates.

While the economy is improving, the Fed noted in its July statement on interest rates this week that slackness remains in the labor market.Meanwhile, silver for September delivery was down 0.44% at $20.322 a troy ounce, while copper futures for September delivery were down 0.35% at $3.220 a pound.

Oil

Oil prices dropped on Friday after Chinese manufacturing and U.S. employment gauges missed expectations and fueled concerns over the strength of global economic recovery.

In the New York Mercantile Exchange, West Texas Intermediate crude oil for delivery in September traded down 0.69% at $97.49 a barrel during U.S. trading. New York-traded oil futures hit a session low of $97.10 a barrel and a high of $98.09 a barrel.

The September contract settled down 2.09% at $98.17 a barrel on Thursday.

Nymex oil futures were likely to find support at $96.26 a barrel, the low from Feb. 3, and resistance at $102.10 a barrel, Monday’s high.

Separately, on the ICE Futures Exchange in London, Brent oil futures for September delivery were down 0.94% and trading at US$105.03 a barrel, while the spread between the Brent and U.S. crude contracts stood at US$7.54 a barrel.

Natural Gas

Natural gas futures fell on Friday after investors locked in gains stemming from Thursday’s bullish supply report and sold the commodity for profits.

On the New York Mercantile Exchange, natural gas futures for delivery in September traded at $3.802 per million British thermal units during U.S. trading, down 1.03%. The commodity hit a session low of $3.782, and a high of $3.875.

The September contract settled up 1.45% on Thursday to end at $3.841 per million British thermal units.

Natural gas futures were likely to find support at $3.725 per million British thermal units, Monday’s low, and resistance at $3.890, 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 ended July 25 rose by 88 billion cubic feet, below expectations for an increase of 93 billion cubic feet.

The five-year average change for the week is an increase of 42 billion cubic feet.

Total U.S. natural gas storage stood at 2.307 trillion cubic feet. Stocks were 530 billion cubic feet less than last year at this time and 641 billion cubic feet below the five-year average of 2.948 trillion cubic feet for this time of year.

The numbers sent natural gas prices posting hefty gains on Thursday, though profit taking wiped out the rally on Friday, as below-normal temperatures continued to make their way across the eastern half of the U.S.

Cooler temperatures this time of year often prompt households to throttle back on their air conditioning.