Commoditized Wisdom: Report (Week Ending April 26, 2024)
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Key point
Energy prices, except for natural gas prices, were all higher. Crude oil and gasoline prices rose 2% and heating oil and gas oil prices increased 1%. Natural gas prices decreased 1%.- Grain prices were all higher. Wheat and corn rose between 10% and 12%, corn prices gained 2% and soybean prices increased 1%.
- Spot gold and silver prices fell 2% and 5%, respectively. Spot platinum prices fell 2%.
- Base metal prices were lower, except for copper prices. Aluminum prices dropped 4% and zinc, nickel and lead prices fell 1%. Copper prices rose 1%.
- The Bloomberg Commodity Index was unchanged. Gains in the energy and grains sectors were offset by losses in the base and precious metals sectors.
- Small net inflows into commodity ETPs with gold and energy ETP outflows offset by broad commodity and silver ETP inflows.
Commentary
Stock markets recovered last week with the Nasdaq Composite Index strongly outperforming the Dow Jones Industrial Average and, to a lesser extent, the S&P 500 Index. All 3 indexes moved higher through Wednesday, bolstered by a slew of good earnings reports and encouraged by moderate private sector growth (as revealed by S&P Global’s PMI released Tuesday). Though Thursday’s GDP release was lower-than-expected, the report also showed higher-than-expected Q1 inflation, increasing “higher-rates-for-longer” concerns and pushing markets noticeably lower. Meta’s disappointing earning report after hours Wednesday pressured markets lower on Thursday as well. Friday’s as-expected PCE Price Index release combined with better-than-expected Alphabet and Microsoft earnings reports reversed Thursday’s losses, pushing the Nasdaq Composite and the S&P 500 Index 1% and 2% higher, respectively. For the week, the S&P 500 Index rose 2.7% to 5,099.96, the Nasdaq Composite Index climbed 4.2% to 15,927.90, the Dow Jones Industrial Average increased 0.7% to 38,239.66, the 10-year U.S. Treasury rate rose 4bps to 4.66% and the U.S. dollar (as measured by the ICE U.S. Dollar index – DXY) weakened 0.2%.
Oil prices moved higher last week reacting to increased Mideast tensions and a slightly weaker U.S. dollar. Prices were also supported by a greater-than-expected drop in U.S. inventories. Prices were capped, however, by increased inflation concerns and a smaller-than-expected drop in U.S. gasoline inventories.
Spot gold prices decreased last week, falling sharply Monday due to decreased Mideast concerns and rallying stock markets. While prices drifted slightly lower Wednesday and Thursday on inflation concerns, prices moved higher Thursday and Friday on renewed Mideast tensions and as-expected PCE Price Index release. Silver prices sharply underperformed gold prices.
Copper prices moved higher last week benefiting from increased demand expectations amidst supply concerns. Supply concerns brought about by lower mine production along with growing expectations of increased “green” industry demand lent decent support to copper prices. Other base metal prices moved lower on the week affected by Chinese demand concerns and uncertainty surrounding U.S. rate cuts.
Grain prices also moved higher with wheat prices increasing the most. Wheat prices benefited from European frost damage to crops, adverse Ukraine and Russia weather forecasts and on Russia attacks on Ukraine grain infrastructure. Prices also benefited from adverse weather forecasts for Southwestern Plains states. Corn and soybean prices moved higher with wheat prices and benefited, to some extent, from a stronger Brazilian real relative to the U.S. dollar.
Coming Up This Week
FOMC meeting and Payroll Report grab the headlines this week.
Who is Jeff Klearman in our research team? Jeff has over 20 years experience working as a trader, structurer, marketer and researcher. Most recently, Jeff was the Chief Investment Officer for Rich Investment Services, a company which created, listed and managed ETFs. Prior to Rich Investment Services, Jeff headed the New York Commodities Structuring desk at Deutsche Bank AG. From 2004 to 2007, he headed the marketing and structuring effort for rates based structured products at BNP Paribas in New York. He worked at AIG Financial Products from 1994 to 2004 trading rates-based volatility products as well as marketing and structuring. Jeff received his MBA in Finance from NYU Stern School of Business and his Bachelors of Science in Chemical Engineering from Purdue University.
