Weekly Market Recap – May 1, 2020

In the Markets

Early last week, some businesses across the nation began the process of opening their doors again, adding to investor confidence which was also bolstered by encouraging news about Remdesivir trials.  On Wednesday, the commerce department reported that the gross domestic product contracted 4.8% in Q1. The jobless claims report released by the labor department on Thursday added 3.8 million to the tally, now having accumulated over 30 million claims in the past six weeks. Consumer spending was reported to have fallen 7.5% in March.

The DJIA moved higher through the week, then slipped lower on Friday, closing down 51.58 to 23,723.69 (-0.2%). A similar pattern was followed by the S&P 500 spot index as it eased 6.02 points to 2,830.71 (also down 0.2%).  The NASDAQ Composite ended the week at 8,604.95 after a 29.57 drop for the week (-0.3%). Some strength persisted for the Russell 2000, showing an up-move of 2.21 points to 100.96 (+2.2%). A small degree of volatility returned to the option premiums as CBOE’s VIX popped up 1.26 points to 37.19 for a weekly change of  +3.5%. USDX spot index ended the week at 98.68 for a decline of 1.61 (-1.6% for the week).

Metals futures were relatively stable in both the precious and industrial sectors. June gold lost $36.30 (-2.1%) ending at $1,709.40 for Friday’s settlement. May silver, too, declined 2.1% (down 33¢), settling at  $15.025 per troy ounce.  Platinum group metals were less volatile than they had been a month ago. July platinum fell only $3.80/oz. ending the week at $777.90 (-0.5%), while June palladium’s weekly move was a loss of $89.70, closing at $1,886.30 (-4.5%). The base metals we track in our recap were equally lackluster: CME copper ended the week at $2.313/lb. (-1.0%), and LME aluminum also lost 1.0% for the week. Due to the Good Friday bank holiday in UK, LME ended its week on Thursday, when aluminum settled at $1,494.50 per metric ton.

Petroleum market analysts continued their focus on storage fundamentals, precipitated by historically low demand. West Texas Intermediate crude oil for June delivery rebounded $2.84 last week to $19.78/barrel (+16.8%), while North Sea Brent crude gained $3.83 and closed at $25.27 for a 17.9% increase. Heating oil rose 8.6% and gasoline firmed 9.5%, with the June contracts for each ending at $0.7961 and $0.7663 respectively.  Shoulder season doldrums dominated natural gas futures, as June ended at $1.890 per MMBtu (-0.3%).

Food supply chain concerns have become an added unknown factor in fundamental analysis of agricultural product markets. The recent news of COVID-19’s far reaching impact on the US meat industry spans the spectrum from feedlots to processing, from the strains on the labor force and on the distribution networks, and from consumer demand to price gouging by retailers. CME live hog futures prices are 30% higher than a month ago. June hogs rose 21.7% for the week, ending up 11.18 to close at 62.70 cents per pound. Live cattle increased 7.9% since one month ago, with the week’s close at 87.25 (+5.6%) for the week. Milk prices remain in a downtrend although the July contract managed a 2.9% rise for the week, with 13.61 cents as final settlement.

US grain and oilseed markets were mixed, as hedgers assessed the weather on several continents, as well as planting and export intentions. Soybeans rose 15¢ to $8.47¼ (+1.8%), corn lost 4¼¢ to $3.11½ (-1.3%), and wheat retreated 5¼¢ to $5.21½ (-1.0%). In the soft commodity sector, cocoa prices were supported last week by the Ivory Coast extending its pandemic state of emergency to mid-May. July cocoa rose 79 to 2402 (+3.4%).  Somewhat of a rebound for the Brazilian Real sparked a rally in sugar futures as July rose 1.16 to 10.97 for an 11.8% increase from the previous week. Not so with the coffee prices, as weather fundamentals kept pressure on the July contract, ending the week down 0.65 at 106.10 (-0.6%).

World Cup Trading Championships®

Michael O’Keeffe held onto the top position with a 1,038.6% net return. Allen Swiontek switched positions with A. Masters for 2nd and 3rd, with net returns of 343.8% and 317.2% respectively. Yuwen Cao remained in 4th at 225.4% net, with Fernando Pineiro joining the leader board with a net return of 201.5%.

In the Global Cup, Michael Cook maintained 1st with a 228.1% net return. Stefan Seibert held 2nd with a net return of 212.3%. Maxim Schultz held 3rd with a 137.5% net return. Robert Miner moved into 4th with a 118.2% net return and Wayne Wan stayed on the leaderboard in 5th with a 106.6% 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 107.9%, followed by Raul Glavan at 87.4% net. WenChen Zhang climbed to 3rd with a net return of 52.3%, followed by Miguel Garcia and Scott Welsh with net returns of 48.7% and 37.7% respectively.

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