Investing.com – Top 5 things that rocked U.S. markets this week.
1. Wage Growth: Lightening Doesn’t Strike Twice
Traders had to endure yet another week of wild swings in U.S. stock markets as jobs data, Trump’s tariffs and a surprise conciliatory gesture by North Korean leader Kim Jong Un helped U.S. indexes post a weekly win.
U.S. stocks rounded off the week with sharp gains on Friday as the Dow closed 440 points higher after data showed the U.S. economy created 313,000 jobs in February.
Unlike the previous jobs report in January, Friday’s jobs report didn’t spark investor panic as wages grew at a slower pace than estimated, denting the prospect of a faster pace of inflation. That in turn, kept a lid on expectations for a fourth rate hike in December.
That came amid falling geopolitical tensions on the Korean peninsula as the White House confirmed that Trump has agreed to meet with North Korean leader Kim Jong Un.
A day earlier, meanwhile, President Donald Trump, as expected, pushed forward with plans to impose tariffs on steel and aluminium imports on Thursday, but exempted Canada and Mexico while leaving the door open for “real friends” of the U.S. to negotiate exemptions.
2. WTI Crude Soared To Notch Unlikely Weekly Win
When crude prices settled more than 2% lower on Thursday for the second straight day, investors had little hope that oil prices would avert a second-straight weekly plunge were it not for a more than 3% rally on Friday.
The rally on Friday was partly supported by data showing that the number of U.S. oil rigs fell for the first time in seven weeks, pointing to a potential slowdown in U.S. oil output.
While the lower rig count signalled a potential tightening in output, U.S. shale producers are expected to continue to ramp output, taking advance of oil prices above $60 a barrel.
The Energy Information Agency reported Wednesday that U.S. output jumped to a record high per day of nearly 10.4 million barrels last week, while crude stockpiles rose less than expected.
On Friday U.S. crude futures rose $1.95 to settle at $64.91 a barrel.
3. Central Bankers Leave Their Mark on Euro, Yen
EUR/USD settled roughly unchanged for the week, after the European Central Bank (ECB), as expected, left interest rates unchanged and adopted a less hawkish stance in its monetary policy statement, dropping its pledge to increase bond purchases if the economic outlook deteriorates.
ECB president Mario Draghi, however, tempered any notion that the ECB's decision to omit its easing bias from the statement marked the start of shift in policy, as he warned of potential headwinds for the EU economy in the form of subdued inflation, and a potential trade war with the U.S.
The Italian election Sunday, resulting in a hung parliament, had little impact on the euro as it was quick to rebound from any weakness.
The yen – which had served as the safe-haven proxy last week – fell sharply against the dollar as fears of a global trade war subsided, while the Bank of Japan, spearheaded by governor Kuroda, left its ultra-accommodative monetary policy measures unchanged.
4. Gold Prices Averted Third Weekly Slump
Gold prices squeezed a win for the first time in the three weeks despite falling safe-haven demand as Trump’s tariffs were less controversial than many had feared, while geopolitical uncertainty eased after Trump accepted North Korean leader Kim Jong Un’s invite for a sit down.
Some market participants, however, questioned the sincerity of Kim Jong Un’s conciliatory gesture as it was only a few months ago that the two nations exchanged a flurry of verbal threats.
“North Korea best not make any more threats to the United States,” Trump told journalists in August last year. “They will be met with fire and the fury like the world has never seen.”
With a little less than two weeks until the Federal Reserve meets to decide whether to stick or twist on interest rates, traders remain surprisingly optimistic on the prospect of gold adding to this week’s gains.
CFTC COT data showed money managers increased their long bets on gold in the week ended March 9.
5. Bitcoin: How low can it go?
Bitcoin ended the week nursing heavy loss as fresh regulatory threats forced traders to cut their positions on cryptocurrencies.
The SEC warned on Wednesday it would take a closer look at trading platforms operating as exchanges that failed to register with the regulator, leaving many questioning whether this was the start of a wider crackdown.
More technically-minded market participants, however, were quick to point to technical reasons to explain bitcoin’s collapse as the popular digital currency failed to break above a “key level” close to $12,000. Bitcoin rose to high of $11,696 this week before retreated sharply.
Frank Cappelleri, executive director, institutional equities at Nomura Instinet, warned that “if bitcoin fails to garner demand at current levels then “the February lows [around $6,000] would in the cross-hairs."
The prospect of a flood in demand looks unlikely, however, as the total cryptomarket cap fell to about $372 billion – at the time of writing – down nearly 20% from $457 billion last week, indicating that investors continue to slash their bullish bets on crypto bets, while new entrants remain reluctant to buy the dips.