Commoditized Wisdom: Report (Week Ending April 5, 2024)
Posted:
Key points
Energy prices were all higher last week. Crude oil prices rose 5% and gasoil and heating oil prices gained 6%. Gasoline and natural gas prices increased 3% and 1%, respectively.- Wheat prices repeated the previous week’s performance with Chicago wheat prices rising 1% and Kansas City wheat prices falling 1%. Corn prices fell 2% and soybean prices lost 1%.
- Spot gold prices continued their move higher, rising 4% and spot silver prices jumped 10% higher. Platinum prices increased 2%.
- Base metal prices were all higher with aluminum, copper and nickel prices rising 5% to 6% and zinc prices gaining over 8%. Lead prices rose 4%.
- The Bloomberg Commodity Index increased 3.5%, bolstered by gains in the energy and base and precious metals sectors.
- Net inflows last week with large silver and decent broad commodity inflows partially offset by gold and energy ETP outflows.
Commentary
All 3 major indexes finished the week lower, with the Dow Jones Industrial Average faring the worst. Reduced Fed rate-cut expectations were the primary factor moving both stock and bond markets lower. The previous Friday’s as-expected PCE Price Index release, Better-than-expected manufacturing activity and hawkish Fed officials’ comment combined to pressure stock markets lower. Wednesday’s dovish Fed Chair Powell comments and weaker-than-expected services PMI index release managed only to restrain losses while Friday’s stronger-than-expected jobs report worked, surprisingly, to move markets noticeably higher (perhaps more due to cooling wage pressures). For the week, the S&P 500 Index fell 1% to 5,204.34, the Nasdaq Composite Index decreased 0.8% to 16,248.52, the Dow Jones Industrial Average dropped 2.3% to 38,904.10, the 10-year U.S. Treasury rate rose 20bps to 4.40% and the U.S. dollar (as measured by the ICE U.S. Dollar index – DXY) weakened 0.2%.
Crude oil prices moved higher again last week. Supply concerns dominated last week’s move with increased Israel-Iran tensions, and continued Ukraine drone attacks on Russia refineries increasing expectations of production/shipping disruptions. Strong U.S and Chinese economic data also contributed to the gains, bolstering demand expectations. Gains on the week, however, were capped by an unexpected rise in U.S. oil inventories.
Spot gold prices moved markedly higher last week, buoyed by central bank and haven demand (resulting primarily from Increased Israel-Iran tensions and the ongoing Ukraine-Russia conflict) and despite increased uncertainty regarding Fed rate cuts following hawkish fed officials’ comments and strong U.S. economic data.
Copper prices moved higher last week bolstered by significant mining production declines in Canada, the Congo and Chile. Also pushing prices higher was stronger-than-expected manufacturing activity in China and strongside U.S. economic data. Prices, however, fell Friday on increased Fed rate-cut uncertainty following a stronger-than-expected U.S jobs report.
Corn prices moved lower again last week, partly from the previous week’s bearing USDA Planting Intentions and Grain Stock report but also due to sluggish exports and Avian flu concerns. Soybean prices also moved lower. Soybean prices, too, continued to be pressured by the previous week’s USDA report but also from increased South America supply. Prices, however, were floored by rising soybean oil prices.
Coming Up This Week
CPI, PPI and FOMC minutes headline this week’s data releases.
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.
