Markets: Down On Friday, Wary About The Week

For such a rotten employment report, the Wall Street reaction ended up being surprisingly muted: at one stage the Dow was down by more than 150 points, but those loses were cut to just 62 points by the close early Saturday, our time.

A better indicator was gold, which jumped on the day and another was the yield on the key 10 US Treasury bond- down a massive 0.13% to 3.02% after falling under 3% at one stage during the day as investors turned their bets to negative on the economy and started fretting about a recession.

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But despite one or two solid days after Monday's holiday, the wider market's rebound from the week before ran out of steam and Friday's sell off was helped by the continuing fear and concern about the economy.

And keep a close eye on Italy: banks shares sold off again for the second time in three weeks and the market suffered its biggest fall in 14 months.

Something if brewing in the market's mind about Italy which seems to be replacing Spain as the next country of concern.

In the US

The Dow ended at down 62.29 points, or 0.49%, to 12,657.20.

The Standard & Poor's 500-stock shed 9.42 points, or 0.70%, to 1,343.80, as financials, industrials and energy stocks struggled.

All 10 of the S&P 500 sectors closed in negative territory.

The Nasdaq Composite fell 12.85 points, or 0.45%, to 2,859.81.

For the week, though, all three major US stock indexes rose:

The Dow was up 0.6%, while the S&P 500 rose 0.3% and the Nasdaq gained 1.6%.

And the news did nothing to dispel the gathering unease that the Republicans and the Obama Administration are headed for a train wreck on the question of spending, the debt ceiling and the August 2 deadline.

In Australia,

The Share Price Index futures fell a nasty 40 points to 4600 overnight Friday, pointing to losses at the start of local sharemarket trade this morning.

China's inflation news on Saturday will add to those concerns.

At the close on Friday, the benchmark ASX200 index had gained 49.2 points, or 1.1%, to 4654.7, while the All Ordinaries index added 49.9 points, or 1.1%, to 4716.

That was a fit of optimism.

The Australian market rose 1.4% for the week.

In currencies,

The Aussie dollar eased slightly overnight Friday to end around $US1.0755, roughly steady on the week before.

The New Zealand's dollar hit another record on Friday night, rising 1.3% to 83.79, the highest since the currency was freely floated in 1985.

The U.S. dollar fell against the yen, Swiss franc and sterling on Friday as the bad jobs data raised expectations that the Federal Reserve will leave interest rates low well into next year.

The euro fell 2% against the greenback, while the dollar was a touch weaker against the yen.

The euro is now up 6.5% against the dollar year to date, while the dollar is down 0.7% against the yen in 2011.

Asian markets

Were mixed to higher on Friday and last week, ahead of the US jobs data and the earlier than expected release of the Chinese inflation figures.

Shares in Shanghai managed to end a bit higher on Friday.

Japan's Nikkei Stock Average ended the day 0.7% higher at 10,137.73, while Hong Kong's Hang Seng Index added 0.9% to 22,726.43. China's Shanghai Composite Index rose 0.1% to 2,797.77.

Taiwan's Taiex slipped 0.3% to 8,749.55, while South Korea's Kospi ended little changed at 2,180.35.

The Nikkei ended the week with a 2.7% rise (and is now above the level at March 11), while the Australian market was up that solid 1.4%.

Markets in Hong Kong, Shanghai and Seoul also rose for a third successive week.

In Europe

The Stoxx Europe 600 Index slid 0.4% last week to 273.76.

The index is now down 9 weeks out of the last 10 and off 6% since its February 17 high.

The European Central Bank lifted rates to 1.50%, despite the worsening outlook for the bailed out economies of Greece, Portugal and Ireland.

But watch Italy

Yields on its 10 year bonds remain above 5%, the highest for some while and there are growing concerns about the health of the country's banks.

For the second time in three weeks, Italian shares lost ground, especially banks, sending the index down sharply.

Italy's FTSE MIB Index dropped 7.2%, the biggest fall in 14 months and topping a 5% plus drop two weeks ago.

Shares in banks, UniCredit sank 20% and Intesa Sanpaolo SpA plunged 14%.

Bloomberg said that benchmark indexes fell in 14 of the 18 western European markets last week.

London's FTSE was down a touch, but Germany's DAX Index slipped 0.2% and France's CAC dropped 2.3%.

Gold prices on Friday had their biggest weekly rise since November 2009, thanks to the very weak US jobs report which lifted already nervy fear levels about the health of the stuttering American economy.

Copper weakened, oil was mixed to weaker, but silver jumped sharply.

For the week most commodities gained.

The reasoning is simple: it's not safe haven buying, it's a weak greenback and the belief, reinforced by the rotten jobs report that the easy money policies of the Fed won't be changing any time soon.

So New York spot gold rose to a two-week high of $US1,545.30 an ounce on Friday after the jobs report was issued, then held around $US1,543 for the rest of the session, up from $US1,531.85 late in New York on Thursday.

That left spot gold prices up around 3.8% for the week, the biggest weekly rise since early November 2009.

And Comex gold for August delivery rose to a two-week high at $US1,546, and settled $US11.0 higher at $US1,541.60 an ounce early Saturday morning, our time.

Comex September silver closed up 1 cent at $US36.54 an ounce, but enjoyed a big week, jumping 8.4% as the risk averse because the risk hunters for the first time since the silver price collapsed in early May.

Copper took a bit of a pounding with Comex September metal losing 3c to $US4.41 a pound, down 3 cents for the session on Friday, but up 2.5% for the week.

But copper was still up 2.5% for the week and is up 46% in the past year.

Prices have dropped 5% from the record $US4.6575 in February.

On the London Metal Exchange, copper for delivery in three months lost $US79, or 0.8%, to $US9,661 a metric ton ($US4.38 a pound).

Aluminium, lead, nickel, tin and zinc also fell in London on Friday.

Oil ended a strong week on a weak note thanks to the poor June jobs report.

Prices fell for most of the day, but Brent crude, which now seems to be the world's major indicator price, still ended higher for the week.

In fact Brent crude was more influenced by news of reduced North Sea production.

That was the biggest factor which helped push prices up by 5.8% fore the week.

In fact Brent's premium to Nymex TWI crude pushed above $US22 a barrel, within $US1 of its all-time record three weeks ago.

(That premium is due to oversupply at the main US oil trading point at Cushing in Oklahoma

Brent futures for August fell 26 cents to settle at $US118.33 a barrel, off their $US119.87 peak reached ahead of the US jobs report but well above the $US116.88 low.

Brent crude posted a second straight weekly gain, rising 5.8%, after gaining 6.3% the previous week.

Nymex crude fell $US2.47 to settle at $US96.20 a barrel.

For the week, US crude rose 1.33%, also a second straight weekly gain.

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