Based on our experience of watching previous conflicts, we believe investors tend to have a rather dispassionate view of conflagrations as long as there is no potential impact on oil flows. Although some oil producers have voluntarily curbed shipments through the Gulf, they might resume them once things settle down.
In an unusual first, pretty much all the markets we follow finished higher last week.
A weekly review of global political developments, market volatility and key macroeconomic data shaping equities, commodities, energy and trade heading into the week of Feb. 16.
Last week was another wild time for the markets.
Last week was one for the history books, particularly for those involved in trading precious metals in any way, shape, or form. After weeks and months of relentless price increases, the complex staged one of its most dramatic one day sell-offs on record.
A weekly review of global political developments, market volatility and key macroeconomic data shaping equities, commodities, energy and trade heading into the week of Jan. 26.
From the physical side, as prices for key commodities soar, demand retrenchment – if not outright destruction – materializes. We see this sign most clearly in the Chinese physical markets, which have turned extremely quiet of late in light of the steep price run-ups. That’s particularly the case in copper, nickel, and aluminum.
Trade deals, substitution, and the Midwest premium in the year ahead
We saw solid gains in most markets this past week, but intraday swings were massive as high volatility persists. In base metals, tin was the biggest winner for the week (up almost 13%) followed by nickel (up by 5.2%). Copper and aluminum rose by about 4% each, followed by lead (2.1%) and zinc (up by 1%). The cash to-three month spreads moved into a backwardation for both copper and aluminum. But contangos were evident in the rest of the group.
Markets pushed higher last week, with both commodities and equities enjoying decent runs. But energy sat things out for a third consecutive week. In the US equity complex, investors waded back into mega-cap and AI names after Micron's blowout Q3 earnings sparked buying in the general chip space. For the week, the S&P 500 ended up 0.1%, the Dow finished down by 0.7%, but NASDAQ tacked on 0.5%.