CMC Markets Weekly Report
Stocks in the U.S closed mixed Friday, as even a strong government employment report was not enough to offset ongoing worries over the euro zone debt crisis.
Stocks in the U.S closed mixed Friday, as even a strong government employment report was not enough to offset ongoing worries over the euro zone debt crisis.
The Dow Jones Industrial Average fell 55.78 points, or 0.45 percent, to finish at 12,359.92, whilst the S&P500 slipped 3.25 points, or 0.25 percent, to end at 1,277.81. The tech-heavy Nasdaq on the otherhand gained 4.36 points, or 0.16 percent, to close at 2674.22.
Non-farm payrolls jumped 200,000 in December, according to the Labor Department, pushing the jobless rate to a near three-year low of 8.5 percent. Economists polled by Reuters expected a gain of 150,000.
The jobs news was trumped by ongoing worries over the euro zone. The Euro fell from highs near $1.2815 to around US$1.2700 and finished US trade near US$1.2715. The Aussie dollar held between US102.00c and US102.65c, and closed US trade near US102.30c. The Aussie is near US102.00c this morning. The Japanese yen rose from 77.30 yen per US dollar to near JPY76.95, closing US trade near JPY77.00 and is near JPY76.85 today.
World crude oil prices were mixed on Friday. Supporting prices was the strong US jobs report and geopolitical risks in Iran and Nigeria. But weighing on prices was profit-taking and a stronger greenback. Nymex crude oil fell by US25c or 0.2 percent to US$101.56 a barrel but London Brent crude rose by US32c to US$113.06 a barrel. Over the week Nymex rose by 2.8 percent and Brent rose by 5.3pct.
Base metals were mixed on Friday. Tin fell less than 0.1 percent and lead fell 2.5 percent, but other metals rose 0.5-1.6 percent. The gold price fell for the first time in six sessions in choppy trade as the better-than-expected US jobs report reduced demand for safe-haven assets. The Comex February gold price fell by US$3.30, or 0.2 percent, to US$1,620.10 an ounce. Over the week gold rose by 3.2 percent.
In other news, ratings agency Fitch lowered Hungary's credit rating to “junk” status, emphasizing the government's reluctance to change its controversial policies in return for aid to stave off a financial crisis.
Euro zone banks slumped amid fears relating to their ability to raise cash in the market, as well as the huge sovereign refinancing needs of the region's countries.
French President Nicolas Sarkozy and German Chancellor Angela Merkel are scheduled to meet in Berlin today and are likely to discuss measures to enforce budget discipline among the EU members to help stave off the ongoing euro zone crisis.
Ahead this week, Australian retail trade data is released. while in the US, consumer credit and the employment trends index are released.
Frequently Asked Questions about this Article…
US stocks finished mixed on Friday. The Dow Jones Industrial Average fell 55.78 points (‑0.45%) to 12,359.92, the S&P 500 slipped 3.25 points (‑0.25%) to 1,277.81, while the tech‑heavy Nasdaq gained 4.36 points (0.16%) to close at 2,674.22.
The Labor Department reported December non‑farm payrolls rose by 200,000, beating economists’ expectations of about 150,000, and the unemployment rate fell to a near three‑year low of 8.5%. The stronger jobs data supported markets but was offset by worries about the euro zone debt crisis, which limited upside.
Ongoing worries about the euro zone debt crisis weighed on markets and reduced demand for risk assets. The euro fell from highs near US$1.2815 to about US$1.2700, closing US trade near US$1.2715, reflecting investor concern about sovereign refinancing needs and pressure on euro‑area banks.
The Australian dollar traded between US$1.0200 and US$1.0265, closing US trade near US$1.0230, and was near US$1.0200 the following morning. The Japanese yen strengthened, moving from about 77.30 yen per US dollar to near JPY76.95 and closing US trade around JPY77.00 (near JPY76.85 the next day).
Nymex (US) crude fell US$0.25 (0.2%) to US$101.56 a barrel, while London Brent crude rose US$0.32 to US$113.06 a barrel. Over the week Nymex crude was up about 2.8% and Brent crude rose roughly 5.3%, influenced by the strong US jobs report and geopolitical risks despite some profit‑taking and a stronger dollar.
Gold eased for the first time in six sessions as the stronger US jobs report lowered safe‑haven demand; Comex February gold fell US$3.30 (0.2%) to US$1,620.10 an ounce, though gold was up about 3.2% on the week. Base metals were mixed: tin fell slightly (less than 0.1%), lead dropped about 2.5%, and several other metals rose between 0.5% and 1.6%.
Ratings agency Fitch cut Hungary’s sovereign rating to ‘junk’, citing the government’s reluctance to change controversial policies in exchange for aid. That downgrade, along with worries about large sovereign refinancing needs across the region, contributed to a slump in euro‑zone bank stocks amid concerns about their ability to raise market funding.
Investors should watch Australian retail trade data, as well as US releases including consumer credit and the employment trends index. These reports can give further insight into consumer activity and labour market momentum following the recent jobs print.
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