Investing.com – Top 5 things that rocked U.S. markets this week
1. Trump's Tangle With Allies Keeps Lid on U.S. Equity Rally
U.S. stock markets rose more than 1% this week but gains were held back in the latter part of the week somewhat as focus shifted to escalating trade tension between the U.S. and its key allies as the G7 summit got underway.
U.S. President Trump refused to back down from his tough stance on tariffs, as he vowed to "fight" for the United States, and criticised allies, accusing them of imposing massive tariffs and creating non-monetary barriers.
Tech was also one the stories of the week after coming under pressure on Thursday and Friday as Facebook (NASDAQ:FB) and Apple (NASDAQ:AAPL) fell.
Apple fell nearly 1% Friday on reports the iPhone maker warned its supply chain to make fewer parts for iPhones in the second half of 2018 amid expectations for lower sales.
Shares of Tesla (NASDAQ:TSLA) rallied sharply this week after CEO Elon Musk said it is "quite likely" Tesla will hit a weekly Model 3 production rate of 5,000 cars by the end of June.
The S&P 500 closed more than 1% higher for the week at 2,779.03.
2. Crude Oil Prices Post Third Straight Weekly Slump
Crude oil prices posted a third straight weekly loss after settling lower Friday on concerns about ongoing U.S. output after data showed the number of U.S. oil rigs continued to climb.
Oil price action was choppy for most of the week as OPEC members attempted to allay fears the oil cartel would lift limits on production curbs at its June 22 meeting.
U.S. oil output, meanwhile, continued to rise as the Energy Information Administration said Wednesday U.S. oil output rose to a record 10.8 million barrels per day.
Oil prices were also limited by a weekly Energy Information Administration report showing U.S. crude supplies unexpectedly rose by 2.072 million barrels in the week ended June 1.
Crude futures settled 22 cents lower on Friday as data showed U.S. oil rigs continued to climb, pointing to signs of growing domestic output.
3. Dollar Suffers Weekly Loss; Emerging Market Currencies Swing Violently
The dollar posted its first weekly loss in four weeks despite expectations the Federal Reserve will hike rates next week for the second time this year.
The Federal Reserve will also release its summary of economic projections outlining expectations for key measures of the U.S. economy including inflation, interest rates, unemployment and GDP.
The dollar was held back by a resurgent euro as European Central Bank (ECB) policymakers stoked expectations the ECB would tighten monetary policy sooner rather than later.
ECB chief economist Peter Praet said on Wednesday the central bank would next week debate whether to cut bond purchases gradually, Reuters reported.
The dollar rose 0.12% to 93.54 against a basket of major currencies on Friday.
Emerging market currencies were also in focus this week as Brazil's real and the Turkish lira made sharp moves.
Brazil's real rallied sharply Friday as positive inflation data lifted expectations for a rate hike, sending the USD/BRL tumbling more than 5%.
4. Gold Notches Weekly Win in Narrow Trade
Gold prices bounced back from a weekly slump as dollar weakness encouraged buying, which was tentative, however, with a widely expected Fed rate hike on the horizon.
Gold prices were unable to capitalise on rising geopolitical tensions as U.S. President Donald Trump went into the G7 meeting expecting a frosty reception after lashing out at Canada and the European Union.
Gold appeared to be in 'wait-and-see' mode through the week as trading was restricted to a narrow range ahead of the Fed rate decision and the release of the central bank's economic estimates.
According to investing.com's Fed Rate Monitor Tool, 33.8% of traders expect the Federal Reserve to hike rates for a fourth time at its December meeting, up from under 30% last week.
5. Bitcoin Ignores Wall Street Attention
Bitcoin seesawed its way to end the week roughly unchanged as regulatory uncertainty continued to weigh on sentiment despite signs of increasing institutional demand for the popular cryptocurrency.
A report this week that Wall Street giant Fidelity was eyeing a move into the crypto space, planning to create products that would push the market for bitcoin to the "next level," attracted a muted reaction.
Bitcoin rose to a high of $7,777.4, testing a price level which some have identified as resistance – price levels that trigger selling – before paring gains.
On the regulatory front, SEC chief Jay Clayton said this week, bitcoin was not a security, and further clarified the U.S. financial watchdog's position on initial coin offerings, or ICOs.
Clayton said the SEC would not bend the rules when it comes to ICOs, which he identified as a security.
"If you have an ICO or a stock, and you want to sell it in a private placement, follow the private placement rules," Clayton said.
Demand for cryptocurrencies modestly improved as data showed the total crypto market cap rose to about $342 billion, at the time of writing, from about $329 billion a week ago.
Over the past seven days, Bitcoin rose 2.36% on the Bitfinex exchange, Ethereum rose 4.28%, while Ripple XRP rose 9.97% on the Poloniex exchange.