Despite a devastating earthquake in Japan and a planned ‘day of rage’ in Saudi Arabia, U.S. equity markets managed to close out the week on a high note pretty much across the board. The Dow rose by 60 points on the day while the broader indexes finished higher as well with the Nasdaq rising by 0.5% and the S&P 500 gaining 0.7%. Meanwhile, commodities were more mixed as gold gained roughly $6/oz. and oil tumbled by more than two dollars a barrel as traders sold off the fuel in anticipation of a collapse in demand out of Japan and a complete non-event out of Saudi Arabia’s protests.
While many investors had expected today’s focus to be on Saudi Arabia, one of the worst earthquakes in history changed that as the 8.9 magnitude quake shook the northeast coast of Japan earlier today. The tremble also set off 30-foot-high waves which spread across the Pacific from Oceania to North and South America. The news sent equities in the region reeling as most Japanese benchmarks were down several percentage points on the day while the yen strangely soared, gaining over one cent against the dollar on the day. Most American stocks were unaffected by the news although the construction and machinery industry soared as investors bought up these companies in anticipation of a demand spike for their products and services.
One of the biggest losers in the ETF world was the iShares MSCI Japan Index Fund (EWJ) which tumbled by 1.6% on the day. Today’s losses were largely the result of the aforementioned quake which has severely impacted the country and is said to be one of the worst quakes to hit the island nation in more than 300 years. Many are also growing concerned that one of the nuclear power plants in the Fukushima Prefecture, near the epicenter of the quake, has not been receiving enough coolant for its red hot core, potentially causing a grave disaster in the already hard-hit country. Analysts have already said that radiation in the area is already 1,000 times normal levels and officials have extended the evacuation zone around the area to several miles. These reports of widespread damage and other issues sent investors running from all Japanese equities pushing EWJ down sharply on what was otherwise a solid day in the markets. [see charts of EWJ here].
One of the biggest winners on the day was the United States Natural Gas Fund (UNG) which jumped by almost 1.8% in Friday trading. Today’s gains came as Baker Hughes reported that the number of rigs drilling for natural gas in the U.S. declined to their lowest levels in more than 13 months. The company reported that there were just 882 rigs drilling for the popular fuel down 17 from the previous week. With a lower output, many traders are now hoping that the fuel’s massive supplies will finally decline, allowing UNG to finally rise up from the doldrums heading into the spring [see fundamentals of UNG here].
Disclosure: No positions at time of writing.