CMC Markets Weekly Report
Stocks in the U.S. closed near session highs Friday, with the Dow posting its second best weekly gain this year, as investors looked ahead to next week's Federal Reserve policy meeting and shrugged off an earlier batch of tepid economic reports.
Stocks in the U.S. closed near session highs Friday, with the Dow posting its second best weekly gain this year, as investors looked ahead to next week's Federal Reserve policy meeting and shrugged off an earlier batch of tepid economic reports.
The Dow Jones Industrial Average rose 75.42 points, to close at 15,376.06. The S&P500 gained 4.57 points, to finish at 1,687.99. And the Nasdaq rose 6.22 points to end at 3,722.18.
On the economic front, the Thomson Reuters/University of Michigan Surveys of Consumers' preliminary September consumer sentiment index fell to 76.8 from the final August figure of 82.1, according to the survey released on Friday. Economists in a Reuters survey expected a reading of 82.
Retail sales rose 0.2 percent in August, according to the Commerce Department, suggesting that economic growth slowed in the third quarter. Economists polled by Reuters had expected a gain of 0.4 percent following an increase of 0.4 percent in July.
And producer prices rose 0.3 percent in August as energy costs rebounded, according to the Labor Department. Economist surveyed by Reuters expected a gain of 0.2 percent.
Business inventories gained 0.4 percent in July, posting their largest increase in six months, according to the Commerce Department. Economists surveyed by Reuters had expected an increase of 0.2 percent.
The slew of economic data came ahead of the Federal Reserve's two-day policy-setting meeting later this week. The central bank currently purchases $85 billion a month in Treasury and mortgage bonds in its effort to stimulate the economy. The latest Reuters poll showed economists at a majority of U.S. primary dealers expect the Fed to announce it will cut its bond purchases by $10 billion.
Still, worries over Syria lingered as U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov continued talks on disarming Syria's chemical weapons program. After Thursday's meeting, Kerry said pledges of Syria's regime to give up its chemical arms were "simply not enough."
In commodity markets, Oil prices closed in mixed fashion as the US and Russia held crucial talks on dismantling Syria's chemical weapons arsenal. New York's main contract, West Texas Intermediate for October delivery, slipped 39 cents to close at $US108.21 a barrel on Friday. The European benchmark, Brent North Sea crude for delivery in October, edged up 15 cents on the future contract's final day to $US112.78 a barrel in London trade.
Gold futures have fallen to their lowest price in five weeks as investors anticipate the Federal Reserve's upcoming meeting will set the stage for winding down its economic-stimulus program. The most active contract, for December delivery, on Friday settled $US22.00, or 1.7 per cent, lower at $US1,308.60 a troy ounce on the Comex division of the New York Mercantile Exchange. This was the lowest settlement since August 7 and down 5.6 per cent from last Friday's close.
Base metals closed mostly lower on the London Metal Exchange (LME) as a stronger US dollar and concerns that the Federal Reserve may decide to start to remove economic stimulus next week pressures the group.
At the close of open-outcry trading on Friday, LME three-month copper was 0.2 per cent lower on the day at $US7,041 a metric ton. Earlier in the session the metal had extended losses made in the previous session to hit its lowest level in five weeks.
Aluminium closed 1.2 per cent lower at $US1,789.50 a ton. Lead fell the most, to close 2.3 per cent lower at $US2,071 a metric ton.In Australia, there's no major economic data released today. In the US the Empire State manufacturing index is released together with industrial production data.
Frequently Asked Questions about this Article…
U.S. stocks closed near session highs on Friday. The Dow Jones Industrial Average rose 75.42 points to 15,376.06, the S&P 500 gained 4.57 points to 1,687.99, and the Nasdaq climbed 6.22 points to 3,722.18. The Dow also posted its second-best weekly gain of the year.
Several U.S. reports were released: the preliminary University of Michigan consumer sentiment index fell to 76.8 from 82.1 (economists had expected 82); retail sales rose 0.2% in August (below the 0.4% economists expected), which the article says suggests economic growth slowed in the third quarter; producer prices rose 0.3% in August (above the 0.2% expected); and business inventories gained 0.4% in July (the largest increase in six months, above the 0.2% expected).
The Fed is currently buying $85 billion a month in Treasury and mortgage bonds to stimulate the economy. A Reuters poll cited in the article showed a majority of U.S. primary dealers expect the Fed to announce a $10 billion cut to those bond purchases, so investors are watching the meeting for any signal of tapering that could affect markets and asset prices.
Oil moved mixed: West Texas Intermediate for October slipped 39 cents to $108.21 a barrel, while Brent for October edged up 15 cents to $112.78 a barrel — with oil influenced by U.S.-Russia talks on Syria’s chemical weapons. Gold futures fell $22 to $1,308.60 a troy ounce (a five-week low), as investors anticipated the Fed might start winding down stimulus. Base metals on the LME closed mostly lower — copper was down 0.2% at $7,041/metric ton, aluminium fell 1.2% to $1,789.50/ton and lead dropped 2.3% to $2,071/metric ton — pressured by a stronger U.S. dollar and concerns over potential Fed stimulus removal.
Yes. Talks between U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov on disarming Syria’s chemical weapons program were ongoing, and worries over Syria lingered. After a meeting, Kerry said pledges by Syria’s regime to give up chemical arms were "simply not enough," which contributed to lingering geopolitical uncertainty mentioned in the article.
The preliminary Thomson Reuters/University of Michigan consumer sentiment index fell to 76.8 in September from a final August reading of 82.1, below economist expectations of 82. Consumer sentiment matters because it can signal how confident consumers feel about spending and the broader economy, which in turn can affect retail sales and corporate earnings.
Yes. In addition to the Federal Reserve’s two-day policy meeting, the article notes upcoming U.S. releases including the Empire State manufacturing index and industrial production data. The article also mentions there was no major economic data out of Australia on the day referenced.
Markets rose toward weekly highs despite some tepid economic reports, reflecting investor focus on next week’s Fed policy meeting and the prospect of tapered bond purchases. Commodities were volatile — oil moved on Syria talks, gold fell on potential Fed tapering, and base metals were pressured by a stronger dollar and stimulus concerns. The key things to watch are Fed announcements and near-term economic data, as they could influence stocks and commodity prices.
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