Exchange traded funds (ETFs) ended higher Friday after the government said the economy grew at a faster pace than expected at the end of last year. Also, investors were able to set aside a long list of worries including high oil prices, problems with Japan’s nuclear reactors and fresh developments in Europe’s debt crisis.
- The U.S. dollar was stronger against most other currencies after a Federal Reserve official raised the prospects for higher interest rates. Philadelphia Fed President Charles Plosser said during a speech Friday that the central bank needed to change policies and raise interest rates in “the not-too-distant future.” Central banks raise interest rates to help counter inflation, and higher rates on government bonds tend to increase demand for the currency linked to that country or region. Plosser is known for his hawkish comments, but with light trading on Friday and not much other news, the dollar is moved higher on the speech, said Camilla Sutton, chief currency strategist at Scotia Capital in Toronto. The PowerShares DB U.S. Dollar Index Bullish ETF (NYSEArca: UUP) ended Friday slightly higher.
- Gold futures settled lower Friday, hit by a stronger dollar even as ongoing conflict in Libya and the Middle East and Japan’s nuclear disaster fed some safe-haven buying. The metal lost steam in the last stretch of floor trading after wavering between small gains and losses for most of the session. On the week, however, gold gained 0.7%. Friday’s trading was tinted by a technical reversal on Thursday, when the metal touched an intraday record high but ended lower. The reversal left gold vulnerable on Friday. The SPDR Gold Shares ETF (NYSEArca: GLD) ended the day flat.
- European stocks finished slightly higher Friday after a volatile session, with German software group SAP AG and French bank Credit Agricole SA among the biggest blue-chip gainers. At a summit in Brussels, European Union leaders agreed on funding for the European Stability Mechanism, the new bailout fund that will replace the current European Financial Stability Facility (EFSF) in 2013. Stephen Pope, managing partner at Spotlight Ideas, said European markets continue to juggle concerns over Japan, the Middle East and European debt, but he predicts buying in the run-up to the quarter-end next week. The SPDR Stoxx Europe 50 ETF (NYSEArca: FEU) ended down slightly on Friday.
- Oil futures settled modestly lower Friday as investors continued to focus on political unrest in the Mideast and as the dollar strengthened. Oil wavered between small gains and losses for most of Friday, supported by ongoing strife in the world’s top oil-producing region but hampered by the stronger dollar. Prices stayed lower after a key gauge of consumer sentiment dropped to its lowest in five months. Friday’s tepid gains and losses fit with “end-of-the-week book squaring,” said Bill O’Neill, a principal at Logic Advisors in New Jersey. The United State Natural Gas ETF (NYSEArca: UNG) jumped 4.15% today.
Gregory A. Clay contributed to this article
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