Weekly Market Recap – July 22nd, 2018

In the Markets

This week, leaders from OPEC member nations met in Vienna, Austria to discuss increasing oil production. On May 22nd, when oil prices were on a strong bullish rally, with WTI futures reaching $72.9/bbl and Brent futures eclipsing $80/bbl, Saudi Arabia and Russia leaned towards raising production by one million barrels per day. The markets corrected, with both WTI and Brent futures falling: however, the meeting resulted in a production increase of only 600,000. As demand grows with further economic development, and production wanes in Venezuela and Libya, time will tell if OPEC’s decision will be enough to quell rising fuel costs.

The rhetoric continued to escalate this week surrounding the American and Chinese trade discussions, as China officially retaliated this week, matching the Trump administration’s $50 billion tariff. In response, President Trump has threatened another $200 billion in tariffs against China, and currently has a team going through the $500 billion of Chinese imports the U.S. received in 2017. Meanwhile, China still holds about $1.2 trillion in U.S. bonds.

As the tariff skirmishes continue, traders and investors should eye the impact rising import prices will have on inflation, as the Federal Reserve has already raised their planned interest rate hikes from a total of 3 to 4.

Precious metals fell this week, with platinum down 1.63%, gold down 0.61%, and silver falling 0.13%. Copper and iron also fell, down 3.74% and 2.06% respectively.

With OPEC’s production increase coming in 40% less than the markets predicted, WTI and Brent futures both rallied. WTI climbed 6.84% to $68.58/bbl, and Brent crude futures rose 3.12% to $75.38/bbl.
Grains took another hit this week, though not as substantial as last week’s steep drop off. Soybeans fell 1.21%, corn fell 1.11%, and wheat fell 1.63%.

The dollar weakened slightly, with the index falling to 94.18. The S&P dropped 0.9% and the NASDAQ fell 0.7%, however it was the Dow Jones Industrial Average, with heavy risk exposure to Chinese markets, that felt the biggest hit from trade war tensions, falling by 2.0%, wiping out its YTD gains.

World Cup Trading Championships

Jan Smolen extended his lead over Paul Skarp to its largest margin of the year, on the back of a 50% rally on the week. Jan finished with a net return of 223.71%, leading Skarp by over 120%. Paul held onto second place, closing the week at 100.84%. Third place was a toss-up between Wayne Wan and Kurt Sakaeda, with Kurt taking over third on Tuesday through Thursday, but Wayne rallied on Friday, retaking the spot and finishing with a net return of 74.35%. Sakaeda finished in fourth with a net return of 58.06%, and the top 5 was rounded out with Takumaru Sakakibara ending the week at 46.36%.

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