Investors flocked to safe haven assets including gold, silver and the US dollar, as Western nations debated their response to an alleged chemical-weapons attack in Syria. Fears of supply constraints also boosted oil prices…..
ETF Securities Research
Although Syria is a relatively small oil producer, global supplies remain tight withLibyan oil output already being constrained. Gold and oil prices eased by Thursday last week when the UK parliament confirmed it would not back the strikes, but investors remain on tenterhooks for the outcome of the US Congress’ vote on its potential participation regarding military action in the region. Cyclical commodities were generally down last week with investor confidence dented by the talk of military strikes.
Despite US Q2 GDP being revised upwards significantly, US consumer confidence beating expectations and the German business climate displaying strong improvements, investors are waiting for the Fed’s next assessment in two weeks’ time. Some cyclical assets received a boost this week with the release of Chinese manufacturing PMI’s that confirmed the on-going rebound of the manufacturing sector.
Defensive investors drive US$69.1mn into physically-backed gold ETCs, marking the strongest weekly flows since the end of March. Gold prices rose 2.3% last week, as investors became re-acquainted with the metal’s insurance characteristics. Some investors returned to building positions in gold after temporarily selling when prices fell sharply in April and June. Silver rose 4.5% last week, but investors trimmed their positions in long silver ETPs by US$5.3mn after strong buying in previous weeks. Historically, gold and silver prices rose sharply during the first few weeks of both Gulf wars and the 9/11 attacks in New York. While prices moderated relatively quickly, they rebounded once again towards the end of the conflict.
Largest inflow into ETFS Brent (OILB) in 18 months. US$32.0mn flowed into OILB, the highest weekly inflow since February 2012, as Brent oil prices rose 4.8% on the back of potential military action. Prospective strikes on Syria have increased fears of tight oil supply as Libyan output has also fallen. While Syria is a relatively small oil producer, a military strike could destabilise other parts of the Middle East, a region that has demonstrated political fragility in recent years.
Outflows reach three month highs of US$5.0mn from long natural gas ETPs. Natural gas prices rose 2.1% last week, on the back of hot weather conditions in the US, prompting profit taking from natural gas ETPs. Rising temperatures has seen increased demand from power consumption in the US for applications like air conditioning.
Dryer weather generates highest inflows in six months into ETFS Agriculture (AIGA). Most agriculture prices gained last week, prompting inflows of US$4.7mn, the highest weekly amount since late February.
Dryer, hotter weather in the US Midwest sent corn and soybean prices 2.0% and 8.2% higher respectively. While some investors bought diversified agriculture baskets to access the weather-related price momentum, others took profits, selling US$3.9mn of long soybean ETPs.
Investors withdraw US$17.7mn out of ETFS Industrial Metals (AIGI) as confidence wavers. Discussions about strikes on Syria last week had led some investors to pare back on their risk asset holdings. Industrial metal prices generally fell along with equities. However, hard data continues to show a global economic recovery remaining on track, and the improvement in the Chinese economy will buttress demand.
Key events to watch this week. As investors digest newsflow surrounding developments in Syria and the Middle East, a torrent of economic data will be released. Central bank meetings of the Euro area, the UK and Japan will be closely monitored for indications of a change in monetary settings. The release of US jobs data for August will be crucial for the upcoming Fed meeting and expectations of bond purchase tapering. Meanwhile Eurozone growth and industrial production will give clarity on whether its recovery is progressing.
- Kategorie: Analyses ETP (Englisch)
- Veröffentlicht am Montag, 02. September 2013 08:00
US equities and precious metals rose last week despite the spike in US bond yields and a stronger US dollar. The silver price rose 1.1% last week, bringing gains over the past 8 weeks to 27%. The gold price also rose, bringing the total increase to 14% since its 5 July low. ….
ETF Securities Research
While the spike in US bond yields is pressuring many financial assets, precious metals took the latest release of the Fed’s FOMC minutes in stride, ignoring the Fed’s statement that it is “broadly comfortable” with moving ahead with reductions in bond buying in the near future. This week investors will focus on the second reading of US’s Q2 GDP and will be poised for further developments in Syria and the Middle East more generally, that could trigger further increases in oil prices.
Most commodities ignore tapering talk. Despite ETP selling of precious metals this year, demand from physical buyers remains strong and has helped sustain price rises. Gold and silver have risen above US$1,400/oz and US$24/oz respectively, marking a bullish signal for the two metals that had difficulty crossing these lines over the past few months. The fact that both gold and silver prices ended the week higher indicates that the start of Fed tapering may have already been largely been priced in to precious metals prices. Rising tension in Syria may have Concerns over dry weather in the US Midwest sent soybean prices 5.4% higher and corn 1.4% higher last week. While significantly better than last year (which was one of the worst droughts in the US since the 1950s), corn and soy plants continue to lag behind their long-term average in terms of development. Insufficient moisture can have a significant effect on soybeans at the current stage of development. Arabica coffee price hit a 4-year low last week on the back of a record crop in Brazil, the world biggest Arabica producer, and a weak Brazilian Real. Natural gas prices rose 3.7%, aided by warmer-than-expected weather in parts of the US.
FTSE® MIB Super Short Strategy (2x) Index surges 3.4% on fears of political crisis in Italy. The short strategy benefited from the threat of a government crisis that could delay Italy’s much needed economic reforms. However, not all European markets recorded a negative performance last week. The DAX® 2x Long Index was up 0.5% on better than expected German PMI and export numbers. Despite growing uncertainty around the timing of the US Fed’s tapering weighing on US equity markets last week, the Russell 2000 small caps index rose 1.4%. Strong US growth and higher domestic exposure have benefited small caps so far this year. At the same time, a fall in demand for cargo transport along with an increase in supply has prompted a 2.1% drop in the DAXglobal Shipping Index last week.
Indian rupee slumps to a record low. With the outlook for the Indian economy rapidly deteriorating, the Indian rupee (INR) has fallen to fresh lows, having depreciated 18% against the US dollar in the past year. Despite the instalment of a new Finance Minister last year and the appointment of a respected ex-IMF Chief Economist to lead the central bank starting later this year, confidence in India’s ability to navigate its way through mounting fiscal problems appears weak. News of the INR1.35 trillion (US$20.94 billion) Food Security Bill to provide cheap grain to the poor, a populist action ahead of the May 2014 elections, has renewed doubts about India’s reformist credentials. The more recent declines in the rupee may be the shock that will force the reformist zeal of the 1990s to return.