Investing.com Weekly Wrap-Up 08 August 2014

U.S. stocks spike on news of Russian pull back; Dow rises 1.13%

by Investing.com Staff, Investing.com

U.S. stocks jumped up on Friday on news Russian troops were set to withdraw from the Ukraine border.

At the close of U.S. trading, the Dow 30 rose 1.13%, the S&P 500 index rose 1.15%, while the NASDAQ Compositeindex rose 0.83%.

The Volatility S&P 500 index, which measures the outlook for market volatility, was down 5.34% at 15.77.

Reuters, citing Russia’s Interfax, reported earlier that Russia had ended its military exercises near the Ukrainian border, which sent stocks surging on hopes tensions between the two countries will wane.

Fears the conflict could erupt and slow global growth have bruised stock prices in recent trading.

Elsewhere, U.S. President Barack Obama gave the go-ahead for air strikes in Iraq to halt a Sunni insurgency and protect Iraqi civilians from the uprising as well as U.S. personnel in Iraq, though events in Ukraine largely drove Friday’s rally.

Still, sentiments that U.S. military action in Iraq will stay limited did add to the geopolitically-driven rally.

The Iraqi government requested assistance, which did water down stocks earlier in the session as investors avoided risk-on asset classes and camped out in safe-haven gold and yen positions.

Leading Dow Jones Industrial Average performers included Home Depot Inc (NYSE:HD), up 2.43%, Goldman Sachs Group Inc (NYSE:GS), up 1.86%, and Chevron Corporation (NYSE:CVX), up 1.75%.

The Dow Jones Industrial Average’s worst performers included Intel Corporation (NASDAQ:INTC), down 0.18%, Microsoft Corporation (NASDAQ:MSFT), down 0.15%, and Verizon Communications Inc (NYSE:VZ), which was up 0.09%.

European indices, meanwhile, ended the day lower.

After the close of European trade, the DJ Euro Stoxx 50 fell 0.21%, France’s CAC 40 fell 0.05%, while Germany’s DAX fell 0.33%. Meanwhile, in the U.K. the FTSE 100 fell 0.45%.

Forex

Upbeat industrial production figures out of France coupled with geopolitical pressures stemming from airstrikes in Iraq and Russia’s backing off in Ukraine weakened the dollar on Friday.

In U.S. trading on Friday, EUR/USD was up 0.35% at 1.3410.

Earlier Friday, data revealed that French industrial production rose 1.3% in June, exceeding expectations for a 1.0% gain, after a decline of 1.6% in May, whose figure was revised from a previously estimated 2.3% drop, which gave the euro an edge over the dollar.

Elsewhere, Germany’s trade surplus narrowed to €16.2 billion in June from €18.8 billion in May.

Analysts had expected the trade surplus to narrow to €17.5 billion in June.

The data gave the euro strength over the greenback, which remained soft as investors digested rapidly unfolding events in Ukraine and Iraq.

Reuters, citing Russia’s Interfax, reported earlier that Russia had ended its military exercises near the Ukrainian border, while in the U.S., President Barack Obama gave the go-ahead for air strikes in Iraq to halt a Sunni insurgency to protect Iraqi civilians from the uprising as well as U.S. personnel in Iraq.

The Iraqi government requested assistance, and gold fell on perceptions that U.S. airstrikes could stabilize the country even if temporarily.

Investors flocked to stocks on sentiments that a Russian decision to back off Ukraine coupled with hopes U.S. airstrikes will halt Iraq’s insurgency will allow the global economy to continue with military conflicts disrupting commerce, thus giving investors room to sidestep the dollar on Friday for more risk-on asset classes.

The dollar was down against the yen, with USD/JPY down 0.02% at 102.07, and down against the Swiss franc, with USD/CHF down 0.38% at 0.9054.

At the conclusion of its monthly policy meeting, the Bank of Japan maintained its pledge to increase the monetary base at an annual pace of 60 trillion yen to 70 trillion yen, though geopolitical events largely guided trading on Friday.

The greenback was up against the pound, with GBP/USD down 0.33% at 1.6776.

Official data showed that the U.K. trade deficit widened to £9.41 billion in June from £9.15 billion in May, whose figure was revised from a previously estimated £9.20 billion. Analysts had expected the trade deficit to narrow to £8.80 billion in June.

The dollar was mixed against its counterparts in Canada, Australia and New Zealand, with USD/CAD up 0.44% at 1.0971, AUD/USD up 0.02% at 0.9276 and NZD/USD down 0.21% at 0.8459.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.18% at 81.45.

Commitments of Traders data from the CFTC (Commodity Future Trading Commission) Bearish sentiment continued to strengthen for the euro and Japanese yen; bullishness weakened significantly for the UK pound and the Mexican peso.und remained strongly bullish, with positive sentiment becoming even stronger. The sentiment for all other currencies weakened slightly from a week earlier. All sentiment is relative to the U.S. dollar.

Gold

Gold prices fell on Friday after reports that Russia was standing down on the border with Ukraine coupled with news that the U.S. has launched airstrikes in Iraq to halt a Sunni insurgency there chipped away at the yellow metal’s safe-haven appeal.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at 1,310.70 a troy ounce during U.S. trading, down 0.14%, up from a session low of $1,307.60 and off a high of $1,324.10.

The December contract settled up 0.33% at $1,312.50 on Thursday.

Futures were likely to find support at $1,283.30 a troy ounce, Tuesday’s low, and resistance at $1,325.90, the high from July 17.

Gold, a popular safe-haven hedge against geopolitical uncertainties, fell on news Russian military exercises on the Ukrainian border are over.

Reuters, citing Russia’s Interfax, reported earlier that Russia had ended its military exercises near the Ukrainian border, while in the U.S., President Barack Obama gave the go-ahead for air strikes in Iraq to halt a Sunni insurgency to protect Iraqi civilians from the uprising as well as U.S. personnel in Iraq.

The Iraqi government requested assistance, and gold fell on perceptions that U.S. airstrikes could stabilize the country even if temporarily.

Still, gold didn’t plummet as concerns tensions could flare anew in Ukraine, Gaza and Iraq in the near future kept some investors sticking with the safe-harbor asset class.

Meanwhile, silver for September delivery was down 0.26% at $19.938 a troy ounce, while copper futures for September delivery were up 0.09% at $3.179 a pound.

Oil

Crude prices came off earlier highs on Friday after markets bet that U.S. airstrikes against Sunni insurgents in Iraq will halt the advance and buffer the country’s large oilfields in the south.

In the New York Mercantile Exchange, West Texas Intermediate crude oil for delivery in September traded up 0.29% at $97.62 a barrel during U.S. trading. New York-traded oil futures hit a session low of $97.18 a barrel and a high of $98.44 a barrel.

The September contract settled up 0.43% at $97.34 a barrel on Thursday.

Nymex oil futures were likely to find support at $96.55 a barrel, Thursday’s low, and resistance at $102.10 a barrel, the high from July 28.

U.S. President Barack Obama gave the go-ahead for air strikes in Iraq to halt a Sunni insurgency to protect Iraqi civilians from the uprising as well as U.S. personnel in Iraq.

The Iraqi government requested assistance.

Oil prices moved off earlier highs on the news, as strikes against insurgents should halt the advance from moving any farther south, where the country’s main oilfields are located.

Elsewhere, Reuters, citing Russia’s Interfax, reported earlier that Russia had ended its military exercises near the Ukrainian border, which also allowed oil prices to ease off earlier highs.

Prices didn’t plunge, mainly due to uncertainty how the ongoing conflicts in Iraq, Gaza and in Ukraine will affect global supplies should they heat up anew.

Separately, on the ICE Futures Exchange in London, Brent oil futures for September delivery were down 0.58% and trading at US$104.83 a barrel, while the spread between the Brent and U.S. crude contracts stood at US$7.21 a barrel.

Natural Gas

Natural gas futures traded near session highs on Friday after updated weather-forecasting models predicted a heat wave to trekk across the eastern U.S. in the coming days, which should hike demand for air conditioning.

On the New York Mercantile Exchange, natural gas futures for delivery in September traded at $3.957 per million British thermal units during U.S. trading, up 2.08%. The commodity hit a session low of $3.874, and a high of $3.960.

The September contract settled down 1.45% on Thursday to end at $3.876 per million British thermal units.

Natural gas futures were likely to find support at $3.858 per million British thermal units, Thursday’s low, and resistance at $3.981, Thursday’s high.

Above normal temperatures are expected to hover over the eastern U.S. starting Monday, and the heat wave will likely last all week, which sent natural gas prices rising on Friday.

New York City will see temperatures hit 93 degrees Fahrenheit on Thursday and Friday of next week, which should prompt households to crank up their air conditioners.

Investors continued to digest Thursday’s supply report.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended August 1 rose by 82 billion cubic feet, below expectations for an increase of 84 billion cubic feet.

Still, inventories rose by 90 billion cubic feet in the same week a year earlier, while the five-year average change is a build of 49 billion cubic feet, which sent prices falling.

Injections of gas into storage have surpassed the five-year average for 16 consecutive weeks, alleviating concerns over tightening supplies.

Total U.S. natural gas storage stood at 2.389 trillion cubic feet. Stocks were 538 billion cubic feet less than last year at this time and 608 billion cubic feet below the five-year average of 2.948 trillion cubic feet for this time of year.