CMC Markets Weekly Report
Stocks in the U.S eked out modest gains Friday, buoyed by a better-than-expected government jobs report, but still ended off their best levels following news of a "credit event" in Greece.
Stocks in the U.S eked out modest gains Friday, buoyed by a better-than-expected government jobs report, but still ended off their best levels following news of a "credit event" in Greece.
The Dow Jones Industrial Average squeezed out a gain of 14.08 points, or 0.11 percent, to close at 12,922.02. The S&P500 gained 4.96 points, or 0.36 percent, to end at 1,370.87 whilst the tech-heavy Nasdaq rose 17,92 points, or 0.60 percent, to finish at 2,988.34.
In afternoon trading, Greece triggered the payment on default insurance contracts by using legislation that forces losses on all private creditors, according to the International Swaps and Derivatives Association. This follows news that ratings agency Fitch cut Greece's rating to "restricted default" over its bond swap deal.
On the economic front, employers added 227,000 jobs last month according to the Labor Department, while the unemployment rate held steady at a three-year low of 8.3 percent. Economists polled by Reuters had expected a gain of 210,000.
Also on the economic front, U.S. trade deficit surged to $52.6 billion in January, the widest imbalance since October 2008 as imports hit an all-time high, according to the Commerce Department. Exports were up a smaller 1.4 percent to $180.8 billion.
Meanwhile, wholesale inventories grew 0.4 percent in January, according to the Commerce Department. And sales dropped 0.1 percent, while analysts had forecast a 0.8 percent gain.
Major currencies drifted lower against the greenback in European and US trade on Friday. The Euro eased from highs near US$1.3270 to around US$1.3095, and was near US$1.3120 in late US trade. The Aussie dollar eased from highs around US106.60c to US105.65c, and was close to US105.75c in late US trade. And the Japanese yen eased from 81.50 yen per US dollar to JPY82.64 and was near JPY82.41 in late US trade.
Benchmark crude oil prices rose again on Friday, buoyed by solid US jobs data, and on hopes that latest Chinese economic data will lead to easier monetary policy. But a firmer greenback restrained prices. US Nymex rose by US82c or 0.8 percent to US$107.40 a barrel while London Brent crude rose by US54c to US$125.98 a barrel. Over the week Nymex rose by 0.7 percent and Brent rose by 1.9 percent.
Base metal prices rose on Friday with optimism sparked by the Greek bond deal and US jobs data. Metals rose 1.1-2.7 percent but lead slipped 0.1 percent. Over the week, metals fell between 0.9-3.9 percent with aluminium faring worst. The gold price also rose with the April Comex gold price up by US$12.80 or 0.8 percent to US$1,711.50 an ounce. Gold was flat over the week.
Turning to this week's economic calendar, apparent improvement in the US economy will be tested this week with releases of business inventory and retail sales data on Tuesday, the Empire State and Philly Fed manufacturing indices on Thursday, and industrial production and consumer sentiment on Friday. The US PPI is out on Thursday and the CPI on Friday.
Australia's week begins with a Labour Day Holiday in Victoria and Tasmania today. Tomorrow will see housing finance and investment lending data along with the monthly NAB business confidence survey, followed on Wednesday by the Westpac consumer confidence survey and fourth quarter housing starts. Thursday sees inflation expectations and vehicle sales along with the RBA's quarterly bulletin.
On the local stock front there are still quite a few ex-dividends to work through this week and Thursday sees a late rush of earnings results from resource juniors such as Ampella (AMX), Altona (AOH), Bandanna (BND), Endeavour (EVR), Karoon (KAR) and Molopo (MPO) along with retailer Myers (MYR).
Frequently Asked Questions about this Article…
The U.S. Labor Department reported employers added 227,000 jobs and the unemployment rate held at a three‑year low of 8.3%. That stronger‑than‑expected payrolls print (economists had forecast about 210,000) helped lift U.S. stocks and commodity prices on the day, even though markets later pared gains on other headlines.
Greece used legislation that forces losses on private bondholders, which the International Swaps and Derivatives Association (ISDA) said triggered payment on default insurance contracts. Ratings agency Fitch subsequently cut Greece to “restricted default.” The news dented investor sentiment and trimmed earlier market gains, showing how sovereign debt actions can quickly affect global markets.
Benchmark crude rose on the stronger U.S. jobs number and hopes for easier Chinese policy: U.S. Nymex was about US$107.40 a barrel (up roughly US$0.82) and London Brent near US$125.98 (up about US$0.54). Base metals rose 1.1–2.7% on the day (though metals were down across the week), while April Comex gold climbed about US$12.80 to US$1,711.50 an ounce and was effectively flat for the week.
The Commerce Department reported the U.S. trade deficit widened to US$52.6 billion in January — the biggest gap since October 2008 — as imports hit a record high while exports rose 1.4% to US$180.8 billion. Wholesale inventories increased 0.4% in January, but wholesale sales unexpectedly fell 0.1% (analysts had forecast a 0.8% gain). These mixed signals suggest uneven momentum across the economy and are important inputs for investors watching growth and inflation trends.
Major currencies drifted lower versus the U.S. dollar in European and U.S. trade: the euro eased from around US$1.3270 to about US$1.3095 (near US$1.3120 later), the Australian dollar eased from highs near US$1.0660 to about US$1.0565 (near US$1.0575 later), and the yen moved from roughly JPY81.50 per US$ to about JPY82.64 (near JPY82.41 later). Currency moves can influence multinational earnings, commodity prices and portfolio returns.
Key U.S. data to watch includes business inventories and retail sales (Tuesday), the Empire State and Philly Fed manufacturing indices (Thursday), industrial production and consumer sentiment (Friday), the Producer Price Index (PPI) on Thursday and the Consumer Price Index (CPI) on Friday. These reports can affect market expectations for growth and inflation.
Australia’s week starts with a Labour Day public holiday in Victoria and Tasmania. Upcoming releases include housing finance and investment lending data and the NAB business confidence survey (Tuesday), the Westpac consumer confidence survey and Q4 housing starts (Wednesday), and inflation expectations, vehicle sales and the RBA’s quarterly bulletin (Thursday). There are also several ex‑dividend dates to work through this week.
A late Thursday rush of results is expected from resource juniors and a retailer: Ampella (AMX), Altona (AOH), Bandanna (BND), Endeavour (EVR), Karoon (KAR), Molopo (MPO) and retailer Myers (MYR). Earnings from these companies can drive volatile share‑price moves in small‑cap and sector‑specific stocks, so investors often watch these reports closely for operational updates and guidance.
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