Markets In-Review: Mixed Week Ends On A Positive Note

? S&P (SPY) adds 0.9% weekly on encouraging U.S. economy indications

? U.S. Initial Jobless Claims falls to lowest since July

? Gold prices rise to highest since June

? Euro weakens in speculation of ECB introducing new Quantitative Easing measures next week

Markets ended a fairly mixed weekly trading session, last week, on a rather positive note. U.S. equity is exhibiting very strong performance as the earnings season kicks into higher gear and uncertainty remains high regarding the state of the brittle U.S. economy. The S&P 500 scores a 0.9% weekly gain after trading at more than a percentage point decrease at the middle of the week. This marks the third consecutive weekly gain for the leading U.S. index, and an 8.6% increase vs the low levels seen at the index at the end of September. The NASDAQ saw a tad stronger weekly session adding close to 1.2%, after trading at approx. a 1.2% decrease on Wednesday.

Among the negative indications, U.S. markets were negatively affected by September’s Advance Retail Sales, on Wednesday, which saw a 0.1% Month over Month gain, vs. analyst expectations for a higher 0.2% increase. This was augmented, the same day, by the Producer Price Index losing no less than 0.5% Month over Month, marking the largest decrease for the index since January.

Some encouraging indications on the state of the U.S. economy, on Thursday, have helped U.S the markets in avoiding weekly losses. These include the weekly Initial Jobless Claims falling to a level of 255K, which is the lowest since July, when 255K claims were submitted as well. The U.S. Consumer Price Index was published at -0.2% Year over Year, as the analyst consensus expected. Finer breakdowns, however, see a brighter inflation image for the U.S. economy. Ex. Food and Energy CPI, namely added 0.2% Year over Year, exceeding analyst expectations for +0.1%.

ECB seen potentially diverging to the dovish side, vs. Fed

Either a stronger U.S. economy, or just one with more inflation should also translate to a more hawkish Fed. With this in mind, the USD strengthened by close to 0.7% vs. the EUR as the CPI data was released. Earlier that day, the EUR was weakened by commentary from European Central Bank Governing Council member Ewald Nowotny, who said on the Eurozone inflation that “One has to say that we’re clearly missing our target“, implying the ECB may introduce new measures on this Thursday’s rate announcement. Last Thursday’s declines in EUR/USD stood close to a percentage point. The weakening of the Dollar at the start of the week, however, helped weekly change for the pair sum to a mere 0.1% decline. The EUR also lost some 0.9% vs. the GBP during the week and 0.75% vs. the Japanese Yen.