Market Review By TraderXP:
Gold futures fell below $ 1,600 an ounce for the first time since August, the signals on the U.S. economy spurred optimism undermines demand for the precious metal as a store of value.
"The economy is doing better, and win shares, so that people do not want gold," Michael Gayed, chief investment strategist in New York City Pension Partners LLC, which advises more than $ 150 million inassets, said in a telephone interview. "No one wants to invest in safer assets."
Market News
After a decent rally, probably time for a pause
Shares can fight them toextend seven weeks winning streak, as the quarterly earnings season comes to an end, and the market faces strong technical resistance.
Many analysts argue that the market can spend the next few weeks consolidating gains that have raised test Standard & P 500 by 6.6 percent since the beginning of the year.
S & P 500 ended up 0.1 percent for the week, recovering from the end of the sale on Friday after a report by Bloomberg on February slow sales at Wal-Mart started a slide in shares retailer. It was the seventh week of the income index.
Coefficients rollback increases, from the market in several overbought said Bruce Zaro, chief technical strategist at Delta Global Management Assets in Boston.
"I suspect that the closing of earnings season will at least pause and perhaps pullback," Zaro said. S & P 500 could shave 3 to 5 per cent from the beginning of April, he said.
The fourth-quarter earnings beat expectations mainly. Year after year revenue growth for the S & P 500 company, is currently estimated at 5.6 percent, compared with aJanuary 1 forecast for growth of 2.9 percent, and 70 percent of companies have exceeded analysts' expectations profit up 62 percent long-term average, according to Thomson Reuters data.
On Thursday, Wal-Mart, the largest retailer in the world, is due to report results, unofficially closing earnings period. Investors will be interested to see its quarterly numbers, especially after the news report on Friday that spooked investors.
S & P 500 gained 4,3 percentsince Alcoa kicked off earnings season on Jan. 8.
March 1 deadline is approaching on-the-board federal budget cuts if Congress does not reach a compromise adds another reason for caution, especially in recent economic data pointing to recovery remains uneven.
Industrial production fell by 0.4 percent last month, the Federal Reserve said on Friday, but the production in November and December was much stronger than previously thought.
Resistance testing
S & P 500 was trading near five-year highs, and it notched its highest level since November 2007 this week. But successes have pushed the benchmark index almost as far as it is likely to go in the near future, a lot of resistance is around 1525 and 1540, one analyst said.
As a result, the index is set to move to the side, said Dave Chojnacki, market technician at Street One Financial inHuntington Valley, Pennsylvania. "We just do not have the volume or the catalyst right now" to go up the levels, he said.
At the same time, other analysts said, the market has not shown significant signs of slowing down, including a break below the 15 - and 30-day moving averages.
Such steps would be necessary to show that the momentum is slowing down, or that the market is at risk of correction, said Todd Salamone, director of research at Schaeffer's Investment Research in Cincinnati, Ohio. 14-day S & P 500 moving average at 1511, and the 30-day at 1494. Index closed Friday at 1519.
Recent M & A activity, including the news this week, American Airlines merger and U.S. Airways Group, helped provide some strength to the market this week and optimism that more deals could be on the way.
In the coming days, the market will focus on the minutes from the last Fed meeting, due to be released on Wednesday, which could provide support if they believe that the Fed will remain on the current course of aggressive monetary easing.
Fed minutes released in January spooked markets a bit, when they discovered that some Fed officials thought it would be appropriate to consider ending purchases of assets at the end of 2013. U.S. government bonds rose on the news that, although the market worries about the near end of the quantitative easing has since disappeared.
Among other companies expected to report earnings next week are Nordstrom, Hewlett-Packard, and Marriott International. Reuters.com
Currencies
Sterling, you may have to weaken further, says Bank of England Will
Sterling, you may have to weaken further symmetrical to balance the UK economy, a senior Bank of England's Martin Weale politician said Saturday the finance ministers met in Moscow to discuss the exchange rate.
The British economy has been stagnant for the past two years, and efforts to focus more on exports was little effect, despite a 25 percent depreciation of the national currency during the period between 2007 and 2008, Will said.
"... Perhaps the most natural way to solve the problem for the nominal exchange rate to fall," he said in the text of a speech to be delivered at the conference of the economy at Warwick University later Saturday.
Bank of England adds support sterling weakness before, but Wil comments come at a delicate time.
The pound fell nearly 5 percent since the start of the year. Finance ministers and central bankers from the G20 group of major economies are now meeting in Moscow, where the unfair competition currency on the agenda.
Japan faces particular scrutiny in connection with the policy, which led to a 20 percent drop in the yen since November as itseeks to reflate its moribund economy.
Britain shares many of the problems in Japan, including the very weak growth. Earlier this week, Bank of England Governor Mervyn Kingdefended stimulus policy, which has weakened the country's currency, as a side effect.
Will not say that Britain should actively pursue this policy. But he said the Bank of England should consider excluding the impact of future inflation, weakness of the pound sterling, as well as recently with the fall of the pound since the beginning of 2013.
"Of course, I can see that there is no strong case for treating the effects of any further depreciation similar to that experienced in the last few weeks in the same way," he said.
"But I must stress that this point is quite different from what I would not worry about the consequences of a sharp depreciation in the inflation outlook."
Will said percentfall almost 5 pounds since the year is likely to add about 1 percent of British prices over the next three years.
The central bank revised its inflation forecasts at the beginning of this week, and now do not expect inflation to fall below 2 per cent of its target until the beginning of 2016, 18 months later than projected in November.
Will noted that a weak currency was the only way Britain can close its current account deficit, which peaked at 5.2 percent of economic output in the second quarter of 2012, the widest in 1989. The deficit amounted to 3.3 percent of output in the three months to September.
Slower growth of exports in response to the previous currency depreciation, unusually strong financial return on investment, or a surprise performance improvement British could all help reduce the deficit.
Will consider the latter two options asunlikely, but I saw some opportunities for export without further improve the weakness of sterling, if a more stable world economy improved British companies risk appetite to foreign markets. Reuters.com
