Robust Jobs Report Underpins Crude Oil, Drives NASDAQ to Record High

Copper prices spiked to their lowest level since February 9 on Friday before rebounding to close higher for the session. The wicked price action was fueled by escalating tensions over U.S. metal imports.

May Comex High Grade Copper settled at $3.1360 up $0.0570 or +1.85%.

Comex High Grade Copper
Daily May Comex High Grade Copper

Traders were primarily reacting to U.S. President Donald Trump’s signing of a 25-percent import tariff on steel and 10-percent tariff on aluminum, with initial exemptions for Canada and Mexico.

Reactions to Trump’s tariffs, which are expected to begin within 15 days, was mixed, triggering the wide two-sided trade.

According to Reuters, International Monetary Fund Managing Director Christine Lagarde said she feared a “tit-for-tat” escalation of trade retaliation over the U.S. tariffs that would sap business confidence and investment, while Chinese metal associations called on Beijing to retaliate.

Reuters also reported that investment bank Nomura, played down the impact on exports from top steel and aluminum maker China, noting that the “U.S. share of China’s total steel and aluminum exports was only around 16 percent.”

U.S. Economic Reports

The U.S. Bureau of Labor Statistics reported the economy added 313,000 jobs in February, well above the 200,000 estimate. The unemployment rate was unchanged at 4.1%. Traders were looking for a drop to 4.0%. Average hourly earnings remained a concern, coming in at 0.1%, below the 0.2% forecast. Essentially, wages grew less than expected, rising 2.6 percent on an annualized basis.

U.S. Equity Markets

The major U.S. stock indexes surged on Friday, driving the NASDAQ Composite to a record high after February jobs growth soundly beat expectations.

E-mini NASDAQ-100 Index
Daily June E-mini NASDAQ-100 Index

The tech-weighted index rose by 1.8 percent to 7.560.81 and hit intraday and closing records, erasing all of last month’s correction. The NASDAQ-100 Index, which is composed of the 100 largest companies in the NASDAQ Composite, also hit a record high. Friday’s session marked the first time since January 26 that either index reached a record high.

The NASDAQ’s strength was driven by strong performances in Facebook, Amazon, Netflix and Google.

Comex Gold
Daily April Comex Gold

Gold

Gold prices rebounded on Friday to close higher after initially dropping following the release of nonfarm payrolls data that far exceeded expectations. The price action was essentially driven by a two-sided trade in the U.S. Dollar.

Gold was also driven lower early in the session on the news that President Trump was prepared to meet North Korea’s Kim Jong Un sometime before May in what would be the first face-to face encounter between the countries’ leaders and could mark a breakthrough in a stand-off over the North’s nuclear weapons.

WTI Crude Oil
Daily May West Texas Intermediate Crude Oil

Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil settled sharply higher, finishing up 3.10% and 2.88% respectively. Investors temporarily cast aside worries over rising U.S. production to focus on the strong jobs data, and optimism that Trump’s proposed meeting with North Korea’s Kim Jong Un could ease geopolitical tensions.

While the jobs data reflects the country’s strong economic conditions, and growth, which should lead to increased energy demand, the market was also supported by the news that Libya’s 70,000 barrels per day El Feel oilfield stayed shutdown despite the Petroleum Facilities Guard saying it had reached a deal to reopen it, according to a field engineer and local mediator.

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James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.