Weekly Market Recap – September 30, 2022

On Monday, the British Pound sank to a record low of £1.03 per USD. To bolster the UK economy, on Wednesday, the Bank of England announced a £65 billion long-term bond-buying program starting with the purchasing of £1.4 billion in 20 year gilts. Hurricane Ian made landfall in Southwestern Florida near Fort Myers. Winds were clocked as high as 158 mph, making it a high Category 4 storm. Ian then moved eastward, crossing the state’s peninsula and hitting South Carolina as a Cat 1 hurricane. The statistics of fatalities, injuries and damages, currently being updated over the weekend, are certain to be historic. Following the outcome of referendums orchestrated by President Putin, he announced that he would annex four Ukrainian regions. An estimated 200,000 Russians have reportedly fled across the borders of neighboring countries in response to Putin’s recent military mobilization. In the Baltic Sea, a massive rupture in the Nord Stream pipeline resulted in what may be the largest release of methane ever recorded. As of our press time, the cause of the event is thought to be sabotage, possibly a TNT detonation.

Monthly economic statistics reported during the week compared with prior levels were: S&P Case-Shiller national home price index -2.9% vs. +3.0%, new home sales 685,000 vs. 532,000, durable goods orders -0.2% vs. -0.1%, PCE price index +0.3% vs. -0.1%, real disposable income +0.1% vs. +0.5%, real consumer spending +0.1% vs. -0.1%, consumer confidence index 108.0 vs. 103.6 and the Chicago purchasing managers index 45.7 vs. 52.2. Weekly reports from the labor department showed that initial jobless claims fell to 193,000 vs. 209,000, while continuing unemployment claims were 1.35 million vs. 1.38 million.

As the year’s third quarter ended, stocks tumbled further on recession concerns, except for a spirited bounce upward on Wednesday in reaction to the UK central bank debt purchases mentioned above. For the three indices we track, ending numbers were: DJIA at 28,725.51 (-2.9%), S&P 500 at 3,585.62 (-2.9%), and the NASDAQ Composite at 10,575.62 (-2.7%). Volatility soared in equities, reflected in the CBOE VIX jumping to 31.62 (+5.7%). For the so-called “fear index”, this is its highest Friday close in five months (33.40 on April 29). In currencies, the USD took a breather as USD Index futures went out at 112.084 (-0.8%). The S&P GSCI’s 607.76 close was up 0.2% from the previous week.

As we implied above, metals futures were mostly supported enough to inch higher. For the contracts we regularly report here, closing prices and percentage movements were as follows: gold at $1,672.00 per ounce (+1.0%), silver at $19.039 (+0.7%), platinum at $859.10 (+0.3%), palladium at $2,182.20 (+5.4%), copper at $3.4125 per pound (+2.1%) and aluminum at $2,162.00 per metric ton (-0.1%).

In our recap, the main sub-categories in the energy futures sector are the petroleum family and methane (natural gas). Regarding price movement, these two groups traded in opposite directions, as the former strengthened and the latter weakened. For the week, the final results and corresponding percentages looked like this: West Texas Intermediate crude at $79.49 per barrel (+1.0%), Brent crude at $87.96 (+2.1%), heating oil at $3.2216 per gallon (+2.0%), gasoline at $2.3698 (+2.7%), NYMEX natural gas at $6.766 per MMBtu (-3.2%), and ICE Dutch gas at €188.800 per MWh (-6.8%).

The contracts on our list of nine agricultural products ended the week with a score of five up and four down. The gainers were: corn at $6.77½ per bushel (+0.1%), wheat at $9.21½ (+4.7%), coffee at $2.2155 per pound (+0.5%), sugar at 18.42¢ per pound (+0.8) and cocoa at $2,354 per metric ton (+4.8%). Those in the red were: soybeans at $13.64¾ (-4.3%), cotton at 85.34¢ (-7.8%), live cattle at 147.050 (-1.0%) and lean hogs at 76.225 (-7.9%). Although we haven’t included lumber as a permanent part of our weekly report, we would like to note that CME lumber futures have retreated to pre-pandemic levels. Priced in dollars per “board foot”, the Nov ‘22 Random Length Lumber contract closed at $422.50 (down from its high of $1,711.20 in May of 2021).

Futures Referenced in Market Recap

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