As volatile as the stock market?’Magic Week’ for global commodity markets

2022-06-05 0 By

Edit xiaoxiang), goods association (Shanghai (ap) – this week, global shareholders are no doubt experienced a memorable “volatile week”, although the benefit from the sharp rebound on Friday, the s&p 500 index barely survived a fourth straight down, but the week the fluctuation amplitude of each trading day an average of 3.4%, to 2020 March into the fastest in the history of the highest since bear.Meanwhile, scenes of high volatility abound in asia-pacific and European equity markets…From tensions between Russia and Ukraine at the start of the week to a hawkish Fed decision in the middle of the week, a series of sudden events undoubtedly kept traders busy in global markets this week.And compared with the stock market’s ups and downs, commodities have been no less volatile this week, with some recording some of the craziest performances in years, if not history.Of course, in contrast to the stock market woes, more commodity prices showed a stronger side this week: perhaps playing into one of the key themes for global markets beyond 2022 — how on earth do people respond to rising inflation?The rise in commodity prices, particularly energy and agricultural commodities, could further exacerbate inflation risks facing the world in the future…Here are some of the week’s most impressive commodity price moves: Natural gas US natural gas futures for March delivery rose another 8.3 per cent on Friday to close at $4.639 per million British thermal units as a “bomb cyclone” loomed over the weekend on the EAST coast.That followed a historic 72 per cent one-day jump in the February contract, which expired on Thursday, in a classic sign of a short squeeze as traders made a mistake by betting on lower prices rush to close their positions by buying higher-priced contracts.The frenzy has also spilled over into key contracts, with US natural gas futures surging 16 per cent in just five days, their biggest weekly gain since August 2020.Crude oil prices rose to their highest in more than seven years on Friday, rising for a sixth straight week as geopolitical turmoil heightened concerns about tight energy supplies.Brent crude futures briefly hit $91.70, their highest level since October 2014.On a weekly basis, the benchmark contract posted its longest winning streak since October.Tight supply also pushed the six-month Brent contract further into a deep backwardation structure, with backwardation reaching $6.92 a barrel, the highest since 2013.At the same time, a growing number of Wall Street banks and oil executives are predicting oil prices could rise above $100 a barrel by the end of the year.The spread between ultra-low sulphur diesel futures for immediate delivery and those for delivery next month reached its highest level in almost seven years this week as backwardation widened sharply as the threat of severe winter storms boosted heating demand in the US North-East.Diesel inventories in the MID-Atlantic region fell to 19.7 million barrels last week, the lowest seasonal level in nearly seven years, according to the EIA.CBOT soybean futures surged on Friday to their highest level since last summer on expectations that dry weather in South America will lead to crop failures and limit global export supplies.CBOT March soybean futures rose 1.5 percent to $14.70 a bushel after hitting their highest since June 15 earlier in the session.Soyoil prices also rose to their highest level since June, while soymeal prices also rose.Compared with this week’s rally in energy and agricultural commodities, metals prices have generally underperformed this week, from industrial metals such as copper to precious metals such as gold.LME copper futures tumbled on Friday, down about 4.5 percent for the week, their biggest weekly decline since October, as the prospect of central bank tightening reduced investors’ appetite for risky assets and boosted the dollar.Saxo Bank analyst Ole Hansen said price weakness was likely to continue until the end of next week’s Lunar New Year holiday, when demand is usually low.In the precious metals markets, spot gold posted its biggest weekly decline in five months this week, breaking its 100-day and 200-day moving averages on Thursday as rising expectations of HIGHER U.S. interest rates pushed the dollar to multi-month highs after the Federal Reserve signaled it would take more aggressive action to curb inflation.Fed Chairman Jerome Powell has made it clear that the fed will act to cool the worst inflation in nearly 40 years, including a possible rate hike in March and more frequent and deeper hikes than expected.With money markets expecting nearly five rate increases this year, traders are now ramping up bets on higher borrowing costs.Source: Finance Union