Written by Investing.com Staff, Investing.com
U.S. stocks higher at close of trade; Dow Jones Industrial Average up 0.04%
U.S. stocks were higher after the close on Friday, as gains in the Technology, Consumer Services and Consumer Goods sectors led shares higher.
At the close in NYSE, the Dow Jones Industrial Average rose 0.04%, while the S&P 500 index climbed 0.19%, and the NASDAQ Composite index added 0.35%.
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The best performers of the session on the Dow Jones Industrial Average were American Express Company (NYSE:AXP), which rose 1.42% or 2.31 points to trade at 164.54 at the close. Meanwhile, Goldman Sachs Group Inc (NYSE:GS) added 1.09% or 4.08 points to end at 378.02 and McDonald’s Corporation (NYSE:MCD) was up 1.01% or 2.37 points to 236.96 in late trade.
The worst performers of the session were Caterpillar Inc (NYSE:CAT), which fell 2.24% or 5.06 points to trade at 220.67 at the close. Johnson & Johnson (NYSE:JNJ) declined 1.26% or 2.10 points to end at 164.98 and UnitedHealth Group Incorporated (NYSE:UNH) was down 0.90% or 3.63 points to 397.86.
The top performers on the S&P 500 were Capri Holdings Ltd (NYSE:CPRI) which rose 5.01% to 55.93, VF Corporation (NYSE:VFC) which was up 4.54% to settle at 82.12 and Coty Inc (NYSE:COTY) which gained 4.15% to close at 9.03.
The worst performers were Vertex Pharmaceuticals Inc (NASDAQ:VRTX) which was down 10.93% to 193.07 in late trade, Incyte Corporation (NASDAQ:INCY) which lost 5.64% to settle at 82.59 and Biogen Inc (NASDAQ:BIIB) which was down 4.44% to 396.30 at the close.
The top performers on the NASDAQ Composite were Novan Inc (NASDAQ:NOVN) which rose 62.61% to 14.7000, Baosheng Media Group Holdings Ltd (NASDAQ:BAOS) which was up 41.77% to settle at 4.48 and Urban One (NASDAQ:UONE) which gained 32.88% to close at 20.530.
The worst performers were Orphazyme (NASDAQ:ORPH) which was down 55.24% to 9.40 in late trade, Recon Technology Ltd (NASDAQ:RCON) which lost 51.10% to settle at 6.230 and Curis Inc (NASDAQ:CRIS) which was down 36.87% to 8.005 at the close.
Rising stocks outnumbered declining ones on the New York Stock Exchange by 1986 to 1175 and 146 ended unchanged; on the Nasdaq Stock Exchange, 2102 rose and 1364 declined, while 144 ended unchanged.
Shares in Vertex Pharmaceuticals Inc (NASDAQ:VRTX) fell to 52-week lows; falling 10.93% or 23.70 to 193.07.
The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was down 2.80% to 15.65 a new 52-week low.
Gold Futures for August delivery was down 0.98% or 18.65 to $1877.75 a troy ounce. Elsewhere in commodities trading, Crude oil for delivery in July rose 0.75% or 0.53 to hit $70.82 a barrel, while the August Brent oil contract rose 0.12% or 0.09 to trade at $72.61 a barrel.
EUR/USD was down 0.51% to 1.2107, while USD/JPY rose 0.33% to 109.67.
The US Dollar Index Futures was up 0.49% at 90.515.
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The dollar jumped Friday, and is set for its first weekly gain in three weeks as the prospect of fresh clues on Federal Reserve monetary policy and weakness in the euro has restored some swagger to the world’s reserve currency.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.51% to 90.54.
There are just days to go until the Federal Reserve’s two day meeting on Tuesday and Wednesday, and recent hot inflation report is likely to get the conversation started on tapering. This is good news for the yields and the dollar.
“The discussion about a Fed exit from bond purchases in the face of rising inflationary pressures should drive the yield on ten-year Treasuries to 2%,” Commerzbank (DE:CBKG) said in a note. “For the dollar, we see upside potential in the short term due to the economic boom in the US.”
But the lift to the dollar will only hold out as long as inflation delivers its end of the bargain. If the pace of inflation fades, then all bullish bets on the greenback are off.
“If inflation falls again next year, and it becomes clear that the Fed is taking its time with interest rate hikes, we expect yields to fall again somewhat and the dollar to weaken again,” Commerzbank added.
Still, Treasury yields were hovering at unchanged levels on Friday, suggesting the greenback had been given a helping hand from a demise in the euro, which makes up about half of the weighing of the dollar index.
EUR/USD fell 0.52% to $1.2106.
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The gold speculator, whether bull or bear, may have found the perfect play for now: Buy at near $1,850 and sell well before $1,900.
The $40 to $50 target for each trade may seem like a dumbed-down way to trade gold when a myriad of chart signals and the intersection of Treasury yields and the dollar should be setting the course.
Yet, a look at the weekly fluctuations on Comex since mid-May suggests that the former would have generated more wins than any artsy-fancy strategy involving multiple hedges.
As the week rolled to a close, an all-too familiar pattern reinforced itself on those who still cared to call gold a hedge against inflation – which it clearly was not, given its inability to respond to America’s worst concerns about price pressures in more than a decade.
The front-month gold futures contract on New York’s Comex settled at $1,879.60 per ounce, down $16.80, or 0.9%. For the week, it was down $12.40 or 0.7%.
The high for the week was $1,906.15 while the low was $1,871.95 – keeping within the $30 to $50 range of the past month.
The spot price of gold, reflective of real-time trades in bullion, was at $1,876.65 by 3:45 PM ET (19:45 GMT), moving between the day’s peak of $1,903.01 and bottom of $1,874.65.
Already in a steady rut since its late Thursday return to $1,900 pricing, gold took a decisive turn lower after Friday’s release of the University of Michigan’s closely-followed Consumer Sentiment for June, which came in at 86.4, versus expectations for 84.2 and the May reading of 82.9.
That nudged the 10-year Treasury yield to 1.454%.
The bigger damage to gold probably came from the somewhat inexplicable rebound in the dollar – although the greenback also did not get too far, with an intraday high of 90.61.
Phillip Streible, precious metals strategist at Blueline Futures in Chicago, said the logic-bending move in the dollar did not make Friday’s trade in gold any easier.
“It’s the same mind-numbing thing each week,” said Streible. “Between gold, the dollar and yields, you have three different plates spinning at the same time, and you’re trying to decide which one to go with – when none really is appealing for now.”
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Oil prices were on track to mark a third week of gains on speculation of runaway summer demand for fuels, although some investors were keeping a wary eye on gasoline consumption, which hasn’t performed to expectations since the start of the peak U.S. driving season.
West Texas Intermediate crude, the benchmark for U.S. oil, settled up 62 cents, or 0.9%, at $70.91 per barrel. Its session high was $71.23, a peak since October 2018.
For the week, WTI registered a 1.9% gain, extending the 5% rise and 4% rally in the two weeks prior.
Brent crude, which acts as the global benchmark for oil, settled up 17 cents, or 0.2%, at $72.69. Brent earlier rose to a session peak of $73.07, the highest for a day since May 2019.
Brent ended the week up 1.1%, after last week’s gain of 3% and the previous week’s rally of 5%.
Oil prices have been on a tear lately amid projections for one of the biggest ever summer demand periods for fuel in the United States as the country reopens fully from Covid-19 lockdowns.
The International Energy Agency, which represents the interests of Western oil consumers, said in its monthly report that global producers would need to boost output to meet demand set to recover to pre-pandemic levels by the end of 2022.
“OPEC+ needs to open the taps to keep the world oil markets adequately supplied,” the Paris-based IEA said, referring to the 13-member Organization of the Petroleum Exporting Countries and its 10 non-member allies.
Despite the optimism over global oil demand, U.S. gasoline take-up has been tepid since the May 31 Memorial Day that marked the start of the peak summer driving period in the world’s largest oil consuming country. That suggests to some that more time was probably needed for U.S. fuel demand to accelerate.
The problem was particularly highlighted in the Weekly Petroleum Status report released by the U.S. Energy Information Administration on Wednesday, which stated that gasoline inventories rose by 7.05 million barrels during the week ended June 4. Analysts tracked by Investing.com had forecast a build of just 1.2 million barrels for the period.
The Washington-based EIA also reported that stockpiles of distillates, which include diesel and heating oil, rose by 4.4 million barrels against expectations for a 1.8 million barrel rise.
Offsetting some of the build in gasoline and distillates, crude stockpiles fell by 5.2 million barrels in the week to June 4, the EIA said, versus a forecast decline of 3.5 million barrels.
“We need to start showing some strong weekly draw numbers on gasoline soon,” John Kilduff, founding partner at New York energy hedge fund Again Capital, said this week. “Otherwise WTI is going to get weighed down, even if crude stocks keep falling.”
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Natural Gas (Hellenic Shipping News)
Natural gas in transition: US LNG developers face shifting tide in global markets
The efforts of Asian and European countries to address climate change and transition their economies toward cleaner energy sources will reshape two key demand centers for US LNG exports.
Asia provides US LNG with plenty of room to grow market share, but the opportunities hinge on the US remaining a low-cost supplier. In Europe, US gas will continue to play a supply balancing role for now, but the EU’s focus on carbon intensity could pose a challenge to US imports over the longer term.
Energy transition in Asia
In Asia, net-zero carbon ambitions will likely require US LNG to arrive in the form of certified low- or carbon-neutral cargoes, according to Jeff Moore, S&P Global Platts Analytics manager for Asian LNG.
Developed economies such as Japan, South Korea and Taiwan could take the lead in aggressively pursuing long-term emissions targets for 2050, said Moore. Importers in those countries have already begun planning on a framework for long-term carbon-neutral LNG contracts. For US producers, the new trade terms could require export cargoes delivered to Asia to meet stringent new quality standards while remaining competitively priced.
Historically, key selling points of US LNG have been price-diversification and flexibility, Moore said. Those factors could continue to give US LNG a competitive edge. In Japan, recent events have served to highlight the value of US LNG to the country’s power mix for those very reasons.
Over the past decade, Japan has become increasingly vulnerable to price fluctuations in the Northeast Asian LNG import market as the role of gas for power generation has expanded following the nuclear accident at Fukushima. In that context, the US LNG linkage to Henry Hub has been critical for price diversification. During the recent North Asian winter crisis of 2020-21, the Platts JKM – the benchmark price for spot physical cargoes delivered ex-ship into Japan, South Korea, China and Taiwan – spiked to a record high $32/MMBtu, highlighting the value of a long-term contract linkage to US LNG supply.
In other Asian countries, where natural gas is helping to eliminate coal and back up renewables, it will be difficult to discount the role of US LNG as well. Existing gas infrastructure in Asia and declining indigenous supply will make US gas fundamental to the region’s market in the years ahead, Moore said.
Over the next decade, gas production from nations in South and Southeast Asia is forecast to decline by nearly 20 Bcm/year, according to Platts Analytics — making the scope for LNG demand growth in Asia immense. The electrification of transport is only starting, and coal-backed financing is on the decline. In Japan, power and heat generation account for 68.9% of LNG demand, while in South Korea it is 53.5%. In Singapore, more importers say they are preparing to expand LNG bunkering operations.
In emerging economies such as China and India, much of the new growth is expected to come from industrial demand, fertilizers, petrochemicals and city gas. In fast-growing sectors such as local gas distribution, imported LNG is expected to help displace dirtier fuels such as biomass.
A foothold in Europe
In Europe, US LNG provided a valuable alternative to traditional pipeline supply from Russia and Norway, playing an expanding role in the market since the first cargoes were delivered in 2016.
The comparatively short shipping distance from the US to Europe, and lower delivered costs, have made US LNG a valuable supply source – particularly for nations in Western Europe. Since 2016, more than 66 Bcm of US LNG, or an average of around 13 Bcm/year, has arrived on the continent’s shores.
Last year, US LNG comprised 4.8% of the European gas market, up from 0.1% in 2016 – surpassing supply from the Netherlands at 4.1% and trailing Qatar only slightly at 5.7%, Gazprom data shows.
LNG will be important as Europe shifts from coal and nuclear power and as gas production in Europe declines, according to Platts Analytics LNG analyst Samer Mosis. That dynamic is under pressure, though, he added.
“A reality wherein the carbon-intensity of energy imports becomes a primary factor is becoming increasingly likely, and in this reality, the connection with the US could see a marked shift,” Mosis said.
LNG output from Qatar, which has been expanding production as well as tending to its emissions profile, is another obstacle to US LNG taking a firmer hold in Europe.
The country is set to boost its LNG production capacity to 126 million mt/year before the end of the decade. It has been busy sealing deals in Europe, adding around 10 million mt/year worth of long-term contracts in 2020 alone. Qatar has also pledged to capture and store more than 7 million mt/year of CO2 by 2027 and offer CO2 offsets in its term contracts with buyers.
“US suppliers looking to ensure they maintain a European option for their exports in the long term will need to take the necessary steps to begin comprehensively and verifiably measuring and mitigating emissions across their value chains,” Mosis said.
The European Commission plans to introduce legislation designed to reduce emissions, including a carbon-border adjustment mechanism and a tool to potentially penalize significant methane emitters.
Amid growing wariness in Europe over the carbon-intensity of US gas, France’s Engie in November 2020 pulled out of talks for a long-term supply deal with US LNG company NextDecade. The French government and environmentalists had reportedly urged Engie to reject the deal because of the environmental impact of LNG sourced from gas produced using hydraulic fracturing.
The same concern prompted the Irish government to impose a moratorium on the development of LNG import infrastructure and to specifically rule out imports of LNG produced from shale gas. Ireland has no LNG import infrastructure at present, but two projects are still under development: US company New Fortress Energy’s Shannon LNG terminal, and a floating import terminal project being developed by UK-listed Predator Oil and Gas.
The EU, however, doesn’t see its policy goals necessarily becoming an impediment to importing US LNG in the coming years. Anne-Charlotte Bournoville, head of international relations and enlargement at the EC’s energy directorate, said the EU and US were “not going in different directions.”
“We both agree that we have to step up measurement, reporting and verification as a necessary condition to the reduction of methane emissions,” Bournoville said in November 2020.
However, European purchasers could show a preference for “best in class” suppliers, she said.
Shell’s head of integrated gas, Maarten Wetselaar, in February called on the EU and US to cooperate on emissions regulations.
“If we can get EU legislation and EU performance standards [and] a similar system in the US so we can declare equivalence between the two, [that] would really help the trade between the two in terms of LNG and would set an example for the world to follow,” he said.
US trade group LNG Allies’ President Fred Hutchison said the turnaround in policy direction under the Biden administration is already easing some of the pressure between Europe and the US.
Source: Platts
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