Weekly Market Recap – May 8, 2020
In the Markets
This week’s statistics gave investors another snapshot of stresses in the economy and society, as a whole. The Department of Commerce reported that the US trade gap rose to $44.4 billion in March, wider than February’s gap of $39.8 billion. According to the Federal Reserve, Consumer borrowing fell for the first time since 2011. The Bank of England projected that Britain will see its deepest annual contraction since 1706. US weekly jobless claims were 3.2 million, bringing the total to 33 million since the pandemic began ravaging the markets. The Department of Labor released its monthly unemployment figure, indicating that 20.5 million jobs vanished in April, putting the level at 14.7%, the highest the nation has seen since 1939; this past February, unemployment was 3.5%, a more than 50 year low. Worldwide, the coronavirus has now infected over 4 million people and killed more than 280,000. In the US, the toll is 1.3 million infected with nearly 80,000 deaths, to date.
Despite these numbers, stocks managed to rise on Friday with some analysts attributing the strength to the fact that the reported unemployment spike was not as high as the average estimates of Wall Street economists. The DJIA rose 607.63 for the week, ending at 24,331.32 (+2.6%); likewise, there was a 99.09 increase for the S&P 500 (+3.5%) closing on Friday at 2,929.80. NASDAQ’s composite index fared even better, registering a weekly up move of 6.0% to 9,121.32, 516.37 higher; while the Russell 2000 scored a 5.61 advance to 106.57 (+5.6%). Volatility in equities has waned; the daily high-to-low ranges last week were the tightest since mid-February: CBOE’s VIX had it’s lowest close since February 26th, as it eased last week to 27.98 for a 9.21 retreat of 24.8%.
In base metals, copper has been steadily gaining since its mid-March lows. The fundamentals point to Chile, the world’s largest copper producer. Mine shutdowns from coronavirus issues have pinched world production. Despite the pandemic’s affect of diminishing industrial demand for the metal, CME July copper gained 4.1% last week, closing at $2.406/lb. LME Aluminum eased to $1,485/ton (-0.6%). Precious metals have been more stable in recent weeks, with fewer abrupt swings. Friday’s June gold close was $1,713.90 from a $4.50 gain (+0.3%). Silver had a bit more of boost, racking up a 5.7% increase of 84¢ to a $15.778 settlement for the July contract. June platinum futures blipped for the week (+1.5%), adding $11.40 to end at $789.30 per ounce. Palladium, behaving more industrial than precious last week, dropped $65.20 to $1,821.10 (-3.5%).
Even though oil storage tightness continues and is exacerbated by reports about “armadas of tankers” lining up to offload their cargo in US ports, the petroleum complex showed remarkable strength. Most energy futures had an up week, the second in a row, as news of Saudi Arabia’s strategy shift emboldened futures buyers to return. The Kingdom is now raising its prices again, especially for its Asian customers. Front-month WTI and Brent crude steadily rallied. WTI closed at $24.74 with a hearty 25.1% increase of $4.96 per barrel, while Brent’s advance of $4.53 to $30.97 amounted to a 17.1% improvement. In the US, drivers are filling their tanks again as more vehicles return to the roads. This was indicated by a robust gasoline consumption report that caught refiners by surprise. RBOB gasoline futures surged 20¢ per gallon (+25.7%) ending at $0.9629 per gallon. CME heating oil gained 14¢ (+18.0%) ending the week at $0.7663 at Friday’s close. Weather forecasts are often the driver for natural gas price direction, which receded last week. The reversal was due to the lessening of the unusual spring cold snap, likely caused by the seasonally atypical late polar vortex. NOAA expects the pattern to normalize in a week to 10 days, returning the eastern half of North America to average May temperatures. June natgas ebbed by 6.7¢ last week (-3.5%), settling at $1.823 per MMBtu.
The downtrend continues in the agricultural sector for the grains/oilseeds group, as planting reports showed numbers that are ahead of last year’s, although Friday’s closes showed modest increases: Soybeans gained 0.1% to close at $8.50½, corn’s $3.19¼ settlement was a mere 0.2% rise, and wheat increased with a 1.1% rise to $5.22 per bushel. Soft commodities were mixed as the ICE’s coffee contract gained 5.2% to $1.1165/lb., sugar slipped 6.2% to its 10.29¢/lb. close, and cocoa eased only $2 (-0.1%), settling at $2,400 per metric ton. Cotton futures improved by 1.7%, as the July contract closed at 56.27¢ per pound. Pandemic economics continue to impact the meatpacking industry on both the supply side and the demand side. Cattle rose 8.5%, while hogs slid 1.6%, closing at $0.9465 and $0.6170 per pound, respectively.
World Cup Trading Championships®
In Futures, Michael O’Keeffe has held the top position, based on the end of week standings, the 5th week in a row with a 955.6% net return. Allen Swiontek’s return of 232.1% gives him the 2nd position on the board. Fernando Pineiro joined the top 3 with a 228% net return. Yuwen Cao and Tim Hall rounded out the top 5 with net returns of 216.4% and 213.5% respectively.
In the Global Cup, Michael Cook maintained 1st with a 204.5% net return. Stefan Seibert held 2nd with a net return of 191.6%. Maxim Schultz held 3rd with a 137.5% net return. Wayne Wan and Robert Miner swapped positions again with net returns of 91% and 79.9% respectively.
In the Forex division of the World Cup Trading Championships®, Raul Glavan finished the week holding onto first place with a net return of 95.7%, followed by Nicholas Ridley at 87.3% net. WenChen Zhang held 3rd with a net return of 46.7%, followed by Scott Welsh and Chien-Hung Chen with net returns of 46.1% and 38.9% respectively.
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