American equity markets closed out the week on a sour note as further concerns over the euro zone combined with a higher-than-expected reading from the U.S. CPI to sink stocks across the board. The Dow fell by 100 points while the S&P 500 sank by 0.8% and the tech-heavy Nasdaq led all three on the downside, slumping by 1.2% thanks to bearish news from both Nvidia and Yahoo. Meanwhile, commodity markets continued to experience heavy trading although the focus was off the precious metals today as both gold and silver finished the day within one percent of their open. Soft commodities were much more volatile in comparison, as most of the grains showed weakness on the day although some such as corn did manage to finish the day in the green. Overall, it was a pretty solid day for energy products as all of the six most traded ones finished in the green, led by natural gas and Brent. These gains came despite another strong day for the dollar as continued weakness in the euro zone helped to boost this trade-weighted index up to the $75.8 mark, a gain of 0.8%, helping to further push investors into T-bills causing yields on these safe havens to fall across most maturity levels.
One of the biggest losers in the ETF world in Friday trading was the iShares MSCI Japan Index (EWJ) which sank by 2.1% in the session. Although two of the country’s biggest banks posted solid levels of net profits, these gains were quickly overshadowed by reports that these banks may have to forgive nearly $8 billion in loans to Tokyo Electric Power, also known as TEPCO, which has been in focus since the Tsunami wiped out the firm’s nuclear power plant at Fukushima. If loans of this scale need to be forgiven it would undoubtedly put a significant strain on the banks’ earnings forcing these organizations to eat substantial losses. As a result of this, EWJ was down broadly in Friday trading, led lower by the banking sector which sold-off significantly in light of this troubling report [see charts of EWJ here].
One of the biggest gainers in the ETF world was the United States Natural Gas Fund (UNG) which rose by 1.5% on the day. Today’s gains in the volatile ETP came as the rig count for the nation, which shows how many natural gas rigs are in operation across the country, declined sharply from the previous week. In the latest report from Baker Hughes, the firm announced that 874 rigs were targeting the fuel across the country, down 16 from the previous week and the fewest total since January 2010. ”This was the first piece of bullish news the market has really had in a while,” said Kent Bayazitoglu, an analyst with energy-advisory firm Gelber & Associates in Houston. “It provided an excuse to buy. This market was probably looking for something to trade off of.” Thanks to this sentiment, traders scooped up UNG on lighter-than-average volume helping to drive the price just below the $11 mark for the fund. Thanks to this surge, UNG finished the week down just 0.2% and is actually up over the last quarter, gaining 1.8% over that time period suggesting that maybe UNG has finally bottomed out, at least in the near term [see more fundamentals of UNG here].
Disclosure: No positions at time of writing.