Weekly Market Recap – August 26, 2022
On Wednesday, the six-month mark since Russia invaded Ukraine; President Putin ordered the Russian military to increase its forces by 137,000 new troops (+10%). In an unprecedented move to reduce carbon emissions, California announced plans to ban the sale of new gasoline-powered cars by 2035. The Biden administration announced it would forgive up to $20,00 in student loans. On Friday, Federal Reserve chair Jerome Powell, in his annual policy speech, warned of “some pain” ahead, implying the central bank will continue raising interest rates to combat inflation.
Monthly economic statistics reported during the week, compared with prior releases were as follows: new home sales 511,000 vs. 585,000, pending home sales index -1.0% vs. -8.9%, durable goods orders 0.0% vs. +2.2%, core PCE price index (year over year) +4.6% vs. +4.8%, real disposable income +0.3% vs. -0.2%, real consumer spending +0.2% vs. 0.0% and the balance of trade for goods -$89.1 billion vs. -$98.6 billion. Quarterly figures showed that real gross domestic product fell by 0.6% in Q2 vs. a 0.9% drop in Q1 and that the Q2 real gross domestic income rose 1.4% compared with +1.8% in Q1. The unemployment numbers for the weekly reports showed initial jobless claims were 243,000 vs. the prior 245,000, and continuing claims fell to 1.42 million from 1.43 million.
Given the comments from Chairman Powell, stocks plunged on Friday, knocking down the market enough to wipe out the August gains. For the week, the closes for the three indices we report were: DJIA at 32,283.40 (-4.2%), S&P 500 4,057.66 (-4.0%) and NASDAQ Composite 12,141.71 (-4.4%). The resulting volatility from collapsing equities sent the CBOE VIX shooting up to 25.56, a 24.1% spike. In currencies, USD index futures went out at 108.751 (+0.6%). The commodities sector climbed 2.8% as per the S&P GSCI, with a 688.96 close.
The metals contracts we track were mixed along sub-category lines, with the precious group decreasing and the industrials increasing. Settlements and weekly percentage changes were: gold at $1,749.80 (-0.7%), silver at $18.746 (-1.7%), platinum at $855.30 (-3.7%), palladium at $2,121.90 (-0.4%), copper at $3.6970 (+0.9%) and aluminum at $2,493.50 (+4.5%).
On the energy charts, the futures contracts on our watch list were mixed for the week. NYMEX WTI rose to $93.06 per barrel, up 2.9%. ICE Brent rallied to $100.99 (+4.4%), and heating oil shot up 7.5%, closing the week at $3.9352 per gallon. Gasoline continued to deflate as the NYMEX contract in the RBOB blend dropped 4.0%, going out at $2.6774 per gallon. Natural gas futures diverged once more. Stateside, NYMEX nat gas hit new contract highs on Tuesday but was then beaten down by Thursday’s bearish inventory report, ending the week at $9.269 per mmBtu (-0.5%). The fundamentals of war keep pushing the ICE Dutch gas contract into record price territory, closing at €346.522 per MWh. This explosive 40.2% rally in one week contributed to Dutch gas doubling in just over one month; it had closed at €163.548 on July 22nd.
For the nine agricultural futures markets we monitor, the pendulum swing was on the bullish side for the group: two moved down, and seven advanced. The livestock contracts closed with lower settlement prices for the week: live cattle at 143.050 (-1.5%) and lean hogs at 90.650 (-2.7%). The gainers were: soybeans at $14.61¼ (+4.1%), corn at $6.64¼ (+6.6%), wheat at $8.05¼ (+4.4%), coffee at $2.381 (+11.6%), cocoa at $2,413 (+1.6%), sugar at 18.47¢ (+2.1%) and cotton at 117.68¢ (+1.4%).
Futures Referenced in Market Recap
Exchange | Commodity | Contract Month |
---|---|---|
CME | Live Cattle | October |
CME | Lean Hogs | October |
CBT | Soybeans | November |
CBT | Corn | December |
CBT | Wheat | December |
ICE | Coffee | December |
ICE | Cocoa | December |
ICE | Sugar | October |
ICE | Cotton | December |
ICE | Brent Crude | October |
ICE | Dutch TTF Gas | October |
ICE | USD Index | September |
NYMEX | WTI Crude | October |
NYMEX | ULSD (Heating Oil) | October |
NYMEX | RBOB (Gasoline) | October |
NYMEX | Natural Gas | October |
NYMEX | Platinum | October |
NYMEX | Palladium | September |
COMEX | Gold | December |
COMEX | Silver | September |
COMEX | Copper | September |
LME | Aluminum | 3 Mo. Forward |
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