Weekly Market Recap – August 28, 2020

In the Markets

US employers added 1.4 million jobs in August, down from 1.7 million in July, lowering the number to 8.4% of workers unemployed. 881,000 new jobless benefit filings were reported on Thursday. The Congressional Budget Office stated that the 2020 budget deficit would be the greatest since the end of World War II as a percentage of the nation’s economy.

The DJIA fell 520.56 (-1.8%), closing at 28,133.31 on Friday. The S&P 500 gave back 81.05 points, ending at 3,426.96 (-2.3%), and the Russell 2000 dropped 2.8% with a 3.51 loss for the week, taking it to 123.14 at the close. Of the four indices we include in this recap, the NASDAQ Composite had its greatest weekly decline in over five months; this week’s sell-off was 382.50 points (-3.3%). The March 20th weekly move was negative 994.71 (-12.6%). For equities traders, the CBOE Volatility Index is one of the market’s vital statistics: it soared 33.2% from the previous Friday as the VIX jumped 7.79 points to 30.75 – the largest one-week incremental move since June 12th when it fell 11.57 (-47.2%).

In base metals, copper has been steadily gaining since its mid-March lows. The fundamental focus is shifting from coronavirus concerns to increasing orders from China and positive reports of electric vehicle production demand. CME copper gained 1.7% last week, closing at $3.0465/lb. (+5.15¢), its first Friday close over $3.00 since June 2018. LME aluminum eased $13.50 to $1,786.50/ton (-0.7%). Precious metals have been retreating with stability recently. Friday’s December gold close was $1,934.39 due to its $40.60 decrease (-2.1%). Silver traders applied a bit more selling pressure, rendering a 3.8% decline of $1.048 to a $26.712 settlement. Percentage-wise, October platinum sank even more for the week (-4.4%), losing $41.80 to end at $898.20 per ounce. Palladium prices behaved contrary to the other precious metals. Traders responded to a record level of physical CME palladium deliveries for September and that contract gained $11.70 (+0.5%) to $2,343.20 per ounce.

Oil prices hit their lowest levels since early June as WTI ended Friday’s session at $39.77, down $3.20 (-7.4%). In a similar move, ICE Brent declined 6.9%, losing $3.15 to settle at $42.66 per barrel. Refined products also slipped. October heating oil lost 8.88¢ cents to close at $1.1515 (-7.2%), while RBOB gasoline lost 6.93¢, settling at $1.1772 (-5.6%). Natural gas softened a bit to end the week at $2.588 per MMBtu. Giving back 6.9¢, the percentage move was a 2.6% loss since the prior Friday.

Across the board in the agricultural commodity markets, the increases marginally outweighed the decreases. Wheat settled at $5.50¼ per bushel, up 1½¢ (+0.3%). Corn, with its $3.58 close, lost 1¼¢ (-0.3%) for the week. Soybeans went out at $9.68 after rising 17½¢ (+1.8%). ICE US coffee jumped 7.65 to 134.00 (+6.1%). Cocoa, for the week, dropped $28 (-1.1%), closing at $2,595 per ton. Sugar took a corrective dip below the 12¢ level, falling 67 ticks (-5.30%) to its 11.93 settlement. December cotton eased 0.09¢ (-0.1%) to its 64.99 closing price. Livestock was mixed, as cattle futures faded by 0.45 (-0.5%) to a 104.450 final print, while hogs had a robust 6.175 rally (+11.5%) ending the week at 59.825 for the October contract.

The economics of illiquidity have hit the CME lumber futures market. The November contract, having tripled in price since its pandemic low in April, went into a tailspin during the week. Lumber open interest ranges in the 4,000-5,000 level. Lately, trading volumes have fluctuated between several hundred to several thousand lots per day. Prices plunged throughout the week, losing $125 per 1,000 board-feet (-16.3%), ending with a $641.50 final value. Year-to-date, the increase is 60.5%. Compared to the other instruments we cover in this recap, lumber is only in second place, out-ranked by the VIX, which is up 123.1% for the year.

World Cup Trading Championships®

In Futures, Michael O’Keeffe has held the top position, based on the end of week standings, for the 21st week in a row with a 420.3% net return. Stephan Seibert held 2nd with a net return of 228.6%. Yuwen Cao remained in 3rd with a net return of 221%. Orhan Özcan and Evgeny Kartashov rounded out the top 5 with net returns of 168.4% and 165.8% respectively.

In the Forex division, Nicholas Ridley remained in the top spot with a 213.4% return. Jan Smolen held 2nd at 126.6%, with Raul Glavan claiming 3rd with a net return of 111.1%. Sergey Shirko and Scott Welsh rounded out the top 5 with net returns of 98.7% and 73.2% respectively.

In the futures division of the 2020-2021 Global Cup Trading Championship, Samuel Sum climbed up to first with a net return of 164.6%, with Jan Smolen following in 2nd at 78.5%. 3rd place is currently held by Adrian Koemel with a net return of 62.5%. Stefan Seibert and Fernando Piñeiro finished the week in 4th and 5th at 55.5% and 33.6% respectively.

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.