Etikett: Crude oil ETP

Safe havens gain traction as trade war escalates

Safe havens gain traction as trade war escalates ETF SecuritiesSafe havens gain traction as trade war escalates

ETF Securities Weekly Flows Analysis – Safe havens gain traction as trade war escalates

Highlights

  • Safe haven demand drives US$23.9mn into long gold ETPs and US$28.1mn into long silver ETPs.
  • Geopolitical risk led to US$21mn outflows from industrial metals basket.
  • Long crude oil ETP inflows reach a seven-week high of US$20.6mn.

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Trade wars escalate. When we first reported on the US tariffs, the Chinese retaliation was very limited, but we noted that it did not preclude further action. Last week we saw China announce a 25% tariff on 106 US goods targeting roughly US$50bn of imports (based on 2017 trade), matching the US’s target of US$50bn of Chinese imports into US. The tit-for-tat trade war has started. US President Trump then threatened a further set of tariffs on US$100bn of Chinese imports. This does not bode well for cyclical assets. Trade wars rarely end up with anyone as a winner. White House’s National Economic Council Director, Larry Kudlow’s, efforts to assuage markets worked temporarily, but lacked credibility after Trump made his recent treats. China said it will counter US protectionism “to the end and at any cost” after Trump’s threats, leaving little room to diffuse the impasse.

Safe haven demand drove US$23.9mn into long gold ETPs, US$28.1mn into long silver ETPs and US$6.9mn into broad precious metal basket ETPs. Inflows into gold have been over US$20mn for three weeks running as safe havens appear to be back in demand. In the past ten weeks there has only been one week of outflows from silver (a minor $2.6mn). In fact over the past (trailing) month, we have seen the highest inflows into silver since June 2017. Inflows into silver ETPs come as a sharp contrast to the investor sentiment in the silver futures market where net positioning is at its most negative ever. The escalation of a trade war adds to the political uncertainty following the hiring a Iran/North Korea policy hawk two weeks ago. With China being such an important broker of diplomacy between in the US and North Korea, antagonising the country appears risky a month before a potential meeting between Trump and North Korean leader Kim Jong-un. While gold prices have not appreciated meaningfully yet, the rising geopolitical risks could send its price substantially higher. Investors seem to be positioning in safe havens as a hedge against adverse outcomes. Friday’s worse-than-expected labour market report provided a tail-wind for gold as it reduces the need for the Federal Reserve to be hawkish.

Geopolitical risk led to US$21mn outflows from industrial metals baskets. Outflows from industrial metals reached an eight-week high. Cyclicals are likely to perform badly if global economic growth takes a hit from rising protectionism.

Long crude oil ETP inflows reach a seven-week high of US$20.6mn. As crude oil prices fell 3.1% last week, investors bought long crude ETPs and took profits on their short oil ETP positions (US$3.3mn). While investors were bargain-hunting, we think that better entry points could open up. At current prices, we expect US production of oil to continue to rise. In its May meeting we expect OPEC to begin discussing how to taper off its current production curbs in 2019. The treat of a trade war should also weigh on oil prices if global demand is dented. Demand expectations from International Energy Agency already look too optimistic. It is a hard to imagine demand continuing to grow at the pace we saw last year at higher prices.

 

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This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (“ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (the “FCA”).
The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

ETFS UK is required by the FCA to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

 

Record inflows into robotic ETFs

Record inflows into robotic ETFs

ETF Securities – Record inflows into robotic ETFs

Highlights

  • Record inflows of US$56.3mn into robotic ETFs.
  • Industrial metal ETPs saw four consecutive weeks of inflows.
  • Crude oil ETP outflows of US$29.3mn followed a 3.3% oil price rally last week.

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Record inflows of US$56.3mn into robotic ETFs. Inflows into robotic ETFs rose to US$56.3mn, the highest weekly flow since their inception. Inflows into cybersecurity ETFs rose to US$15.9mn, the highest since June 2017. Robust inflows into these ETFs track a broader trend of strong performance in technology stocks (the S&P 500® Information Technology Index has risen 5.1% year-to-date for example). However, the increased of utilisation of automation and growing concerns about software security have piqued interest in this sub-class of technology in particular.

Industrial metal ETPs saw four consecutive weeks of inflows. Inflows into long broad industrial metal ETPs amounted to US$22.5mn (a three week high) and inflows into long copper ETPs amounted to US$14.9mn (a six week high). Global Manufacturing Purchasing Indices (PMIs) rose to a seven-year high at the end of 2017. The PMI survey indicates that demand for industrial metals will be strong in 2018 with growth of output, new orders and employment reaching levels last achieved in early- 2011. Last week’s China custom’s import data revealed that 2017 imports of copper ore and concentrate rose to an all-time high.

Long crude oil ETPs outflows of US$29.3mn followed a 3.3% oil price rally last week. Oil ETPs saw their 19th consecutive week of outflows. Investors appear to be taking profit on the most recent oil price rally. Oil prices touched US$70/bbl last week, up from US$56/bbl a year ago. Oil prices have received a tail-wind from falling crude oil inventories in the US, increased geopolitical tensions (in particular in Iran) and strong compliance by OPEC countries with their deal to curb production. However, looking beyond the headlines we see that gasoline inventories have risen (indicating that inventories have simply shifted from crude to product).

Geopolitical issues tend to wax and wane and so we doubt that the geopolitical premium will be persistent. US production of oil is likely to rise to an all-time high in 2018. Lastly with prices currently so strong, the incentive for OPEC countries to end their deal prematurely in June has increased. Although momentum may push oil prices back above US$70/bbl, we don’t think prices are sustainable at that level if fundamentals re-assert themselves over the coming month.

USD ETP shorts rose to a five week high. Rumours that the China will curb its purchases of US Treasuries (although never substantiated) spooked the market and led to a 1.5% depreciation in the dollar basket (DXY). There were US$6.6mn inflows into short US Dollar ETPs, mainly against the Euro. News that Angela Merkel’s Christian Democrat (CDU) party in Germany had reached a breakthrough with the Social Democrats (SPD) on Friday to form a coalition lent support to the Euro.

Important Information

General

This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (“ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (the “FCA”).
The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

ETFS UK is required by the FCA to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.