Weekly Market Recap – April 9, 2020

In the Markets

COVID-19’s spread has led to 16.8 million job losses in the past three weeks. Thursday’s statistic of 6.6 million new unemployment claims was already “in the market” when the figure was released that day. Later that afternoon the Federal Reserve announced a plan for a stimulus package of an additional $2.3 trillion in aid for state and local governments, as well as for small businesses. This helped boost the stock market for a fourth straight day.

Shortened by the Good Friday holiday, the past week saw gains across the board in the US equity indices that we track in this recap. The DJIA ended on Thursday at 23,719.37, up 2,666.84 for the week (+12.7%). In percentage terms, it was the best weekly rally the DJIA had seen since October 11, 1974, when it had risen 14%. In the S&P 500 spot index, a 301.17 increase took it to 2,789.82 (+12.1%). A slightly lower percent gain (+10.6%) for the NASDAQ Composite was due to its 780.50 rise to 8,153.58. A more robust up move was exhibited by the Russell 2000 index that garnered an 18.2% rally by closing up 15.31 to the 99.6 level.

The connection between market volatility and the uncertainty of the pandemic’s trajectory may be implied by the CBOE volatility index. Having ended the week at 41.67, means it has deflated 49% since it peaked on March 18 at 85.47. Some investors consider this index, which is derived from index option premium pricing, as quantification of uncertainty. In addition to the decline of the VIX in the last three weeks, is has been trending more tamely as the intra-day ranges of the index are growing smaller.

In precious metals, however, volatility is not waning. As for gold futures, the intra-day ranges are remaining erratic. Despite the news at the end of March that Russia was ceasing its gold purchases, the yellow metal rallied to new contract highs on Thursday when June gold closed at $1,752.80, up $128.40 for the week (+7.9%). Spot gold bullion ended the week at $1,686.57, the highest it has traded since 2012. The all-time high was $1,856.49 in September of 2011. Silver futures rose 10.5% for the week, up $1.53 settling at $16.05/ounce. Platinum and palladium futures were mixed, with the former rising $24/oz. and the latter falling $8/oz. Their weekly percentage changes were +3.3% and -0.4%, respectively. The base metals we follow here were also mixed for the week. CME copper futures firmed (+3.8%), while LME aluminum eased (-0.8%).

As far as the energy complex is concerned, the markets are still driven by a tug of war. This price discovery process is pitting the demand destruction linked to the virus against the supply negotiations and machinations by OPEC, Russia and the major oil producers.  CME crude futures, May WTI, ended the week at $23.76, which was down $5.58 (-19.7%). The other most-watched barrel, ICE June Brent crude, declined 9.5% last week, losing $3.30 to settle at $31.48. Refined products retreated, as well. May heating oil went back below the one-dollar level, losing 14 cents to close at $0.9726  (-12.4%), while RBOB gasoline lost 4 cents, settling at $0.6773 (-5.3%). A surprise cold wave in the forecast for the US Midwest and Northeast sent natural gas futures off to a three day 20+ cent rally, with a pullback on Thursday. The May contract ended the week up 4.5%.

Wrapping up with agricultural commodities, we’ll start with corn. At the end of the quarter in the previous week, one of the highlighted news items had been the prospective planting intentions release by the USDA. The March 31^st report included 97 million acres for corn, which amounted to 3 million more than the average estimate. About half the US corn crop is used for ethanol production. COVID-19 is altering market supply chain dynamics in unexpected ways. The drop in gasoline demand spurred by the coronavirus also impacted ethanol production, leading to shutdowns of ethanol plants; ironically, some manufacturers are re-tooling their equipment in order to produce hand sanitizer. Corn ended the week practically unchanged, up 1cent/bushel (+0.3%). Wheat firmed 1.3%, and soybeans gained 1.1%. CME’s other ag markets moved as follows: cattle +4.4%, hogs +0.7% and milk was down 6.2%. Most of the soft commodities traded at ICE were up a bit: coffee +4.8%, cocoa +1.8%, sugar +1.2%, cotton +6.6%, however, frozen concentrated orange juice dipped by 2.4%.

World Cup Trading Championships®

Michael O’Keeffe gained the top position with a 909.4% net return as A. Masters moved down to 2nd with a 639.1% net return. Allen Swiontek held 3rd with a 257.7% net return. Yuwen Cao and Stefano Serafini are neck in neck for the 4th and 5th positions with net returns of 218.7% and 218% respectively.

In the Global Cup, Michael Cook held first place for yet another week with a 231.6% net return. Stefan Seibert held 2nd with a net return of 207.2%. Robert Miner moved up to 3rd with a 168.6% net return and Maxim Schulz took 4th with a net return of 131.5%, moving Wayne Wan to 5th with an 87.7% net return.

In the Forex division of the World Cup Trading Championships®, Nicholas Ridley finished the week holding onto first place with a net return of 105.3%, followed by Chien-Hung Chen at 81.2% and Raul Glavan at 75.3% net.  Luca Angelucci moved to 4th with a net return of 60.7%  Miguel Garcia finished the week in 5th with a net return of 55.5%.

Trading futures and forex involves significant risk of loss and is not suitable for everyone. Past performance is not necessarily indicative of future results. World Cup Championship (WCC ) accounts do not necessarily represent all the trading accounts controlled by a given competitor. WCC competitors may control accounts that produce results substantially different than the results achieved in their WCC accounts. WCC entrants may trade more than one account in the competition. CME Group is the trademark of CME Group, Inc. The Globe logo is a trademark of Chicago Mercantile Exchange, Inc.