ETFS Multi-Asset Weekly – Watershed week for commodities spurs ”risk-on” mode
Download the complete report (.pdf)
Highlights
• Commodities: Production cuts hint at first signs of a floor in commodities.
• Equities: Dovish FOMC minutes add $2.5 trillion to equities sending stocks higher.
• Currencies: Greenback heads for biggest weekly slide after 2015 rate hike fades away.
• We will be hosting a webinar that will provide key insights into the fast emerging developments in robotics and the opportunities it represents for investors. Register here to attend
Commodities
Production cuts hint at first signs of a floor in commodities. Despite the unexpected rise in crude oil inventories by 2.3mn barrels, WTI crude and brent oil posted their strongest weekly gains 8.9% and 9.4% respectively. A trifecta of reasons – geopolitical risk premium, a lower US dollar and caution of a spike in oil prices by Shell, explain this week’s oil rally. Zinc spurred the base metals complex, reaching a four-week high of $1824.5 per ton, after Glencore announced plans to cut zinc production by a third due to persistent lower prices. Platinum staged a comeback rising 3.5%, from a lower supply outlook after Zimbabwe asked miners to cut power usage by 25% amid a water shortage. Coffee continued its upward trend supported by stocks falling to their lowest level since August 2012 reported by the Intercontinental Exchange and the impending Brazilian coffee harvest.
Equities
Dovish FOMC minutes add $2.5 trillion to equities sending stocks higher. Global equity markets posted their strongest week in 2015 as the minutes of the FOMC meeting pointed to a delay in the 2015 rate hike. However, we believe the October and November payrolls will seal the decision. After remaining closed for the Golden week, Chinese equities resumed trading on Thursday and ended the week higher by 4.2%. Investors shrugged off the unexpected decline -1.2% in industrial production and -1.8% in factory orders from Germany (devoid of the Volkswagen impact) on hopes of further stimulus by the European central bank (ECB). Meanwhile industrial production in France was up 1.6% marking it first gain since January. Oil dependent sovereign wealth funds (SWFs) are emerging as the latest victim to sliding oil prices, and some oil exporting countries could divert money from their SWFs to bolster their fiscal positions.
Currencies
Greenback heads for biggest weekly slide after 2015 rate hike fades away. The US dollar extended its decline after the 2015 rate hike expectations were delayed further following the minutes of the FOMC meeting. The accommodative monetary policy stance echoed at the ECB meeting coupled with weak industrial production data saw the euro trade higher. The weakest reading in construction output since 2002 and an expanding trade deficit in August postponed the case for a rate hike by the Bank of England, putting sterling on a weaker footing. The RBA left rates on hold at 2.00% for the 6th month in a row and the Aussie strengthened on the back of rising commodities. The Bank of Japan failed to provide any further stimulus and the Yen remained weaker as risk appetite resumed spurred by rising commodities. Despite a rise in unemployment in September, the Loonie gained support from the oil price rally.
For more information contact:
ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com
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 (”FCA”).
Investments may go up or down in value and you may lose some or all of the amount invested. Past performance is not necessarily a guide to future performance. You should consult an independent investment adviser prior to making any investment in order to determine its suitability to your circumstances.
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 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 FSA 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.
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.
Other than as set out above, investors may contact ETFS UK at +44 (0)20 7448 4330 or at retail@etfsecurities.com to obtain copies of prospectuses and related regulatory documentation, including annual reports. Other than as separately indicated, this communication is being made on a ”private placement” basis and is intended solely for the professional / institutional recipient to which it is delivered.
Third Parties
Securities issued by each of the Issuers are direct, limited recourse obligations of the relevant Issuer alone and are not obligations of or guaranteed by any of UBS AG, Merrill Lynch Commodities Inc. (”MLCI”), Bank of America Corporation (”BAC) or any of their affiliates. UBS AG, MLCI and BAC, Shell Trading Switzerland, Shell Treasury, HSBC Bank USA N.A., JP Morgan Chase Bank, N.A., Deutsche Bank AG any of their affiliates or anyone else or any of their affiliates. Each of UBS AG, Merrill Lynch Commodities Inc. (”MLCI”), Bank of America Corporation (”BAC) or any of their affiliates. UBS AG, MLCI and BAC, Shell Trading Switzerland, Shell Treasury, HSBC Bank USA N.A., JP Morgan Chase Bank, N.A. and Deutsche Bank AG disclaims all and any liability whether arising in tort, contract or otherwise (save as referred to above) which it might have in respect of this document or its contents otherwise arising in connection herewith.
”Dow Jones,” ”UBS”, DJ-UBS CISM,”, ”DJ-UBS CI-F3SM,” and any related indices or sub-indices are service marks of Dow Jones Trademark Holdings LLC (”Dow Jones”), CME Group Index Services LLC (”CME Indexes”), UBS AG (”UBS”) or UBS Securities LLC (”UBS Securities”), as the case may be, and have been licensed for use by the Issuer. The securities issued by CSL although based on components of the Dow Jones UBS Commodity Index 3 month ForwardSM are not sponsored, endorsed, sold or promoted by Dow Jones, CME Indexes, UBS, UBS Securities or any of their respective subsidiaries or affiliates, and none of Dow Jones, CME Indexes, UBS, UBS Securities, or any of their respective subsidiaries or affiliates, makes any representation regarding the advisability of investing in such product.