Stocks were in rally mode Thursday as all three of the major indexes jumped to new all-time closing highs.
The Dow Jones industrial average jumped 118 points, or 0.6%, to 20,172.40.
Up by the same percentage were the S&P 500 and the Nasdaq composite — to their new highs of 2307.87 and 5715.18, respectively.
Investors weighed earnings from a batch of companies, including Twitter, Kellogg and Viacom. Energy stocks led the gainers as the price of crude oil headed higher. Utilities were down the most.
Benchmark U.S. crude gained 66 cents, or 1.3%, to $53.00 a barrel in electronic trading on the New York Mercantile Exchange, while Brent crude, the benchmark for international oil prices, added 40 cents to $55.52 a barrel.
U.S. stocks fell Friday but ended off their lows after the economy created a solid but less-than-expected 156,000 new jobs in September and traders reacted to a volatile trading session for the British pound.
The Dow Jones industrial average ended down 28 points, or 0.2%, after dropping more than 100 points earlier in the session. The Standard & Poor’s 500 stock index lost 0.3% and the Nasdaq composite also fell 0.3%.
The government monthly jobs report came in shy of the roughly 170,000 jobs economists’ expected, and the unemployment rate ticked up to 5%, from 4.9%, as more Americans returned to the job market in search of work.
The jobs report, Wall Street pros say, did little to change the market’s outlook for the economy, nor did it change the view that the Federal Reserve is on track to hike interest rates in December for the first time this year. Futures markets show that the odds of a December hike is roughly 65%, or a two in three chance, CME Group data show.
The yield on the 10-year Treasury note edged higher to 1.730%.
Overnight, markets got a scare when the British pound suffered a short-lived plunge of more than 6% vs. the dollar — a sharp move that traders referred to as a ‘flash crash.’ The move was exacerbated by a lack of liquidity at the time of the move and the work of machines, or computer algorithms reacting to the sharp declines, which set in motion trades electronically.
Is the sun shining again on commodity investments? With inflows of $54bn during January and August, investment flows into the asset class are at an all-time high for the first eight months of any year, according to Barclays.
In its latest report on investment flows into commodities, the bank says investments into commodities are supported by three factors: Worries about global economic growth have fuelled money into gold, the desire of investors to benefit from volatility in individual commodities, and lastly, the revival of commodities as a diversification and inflation hedging tool
Gold, especially, has regained its sparkle among investors says Barclays. As the report noted:
Indeed, gold has been by far the single most popular commodity investment in 2016, with flows into physically backed ETPs at a net $27bn, accounting for half of all flows into commodities. This year’s inflow comes after three consecutive years of net outflows from gold ETPs and is already far ahead of the previous record set in 2009, which saw a total net inflow of $19bn.
This year could see the first year of net inflows to commodities indices linked investments for the first time since 2012, says the report. Pension funds and other long-term investors typically buy exposure to the sector through swaps on commodity indices that cover oil, agriculture and metals. That allows them to get broad exposure in one stroke. One of the most popular is the Bloomberg Commodity Index.
The report is optimistic that investment flows will continue “for some years to come”. It explains:
Futures exchange CME Group has taken “emergency action” as the UK casts votes in its historic EU referendum.
In a notice late Wednesday, Chicago-based CME said it had raised special price fluctuation limits in currency futures and benchmark interest rate futures
Fluctuation limits serve as circuit breakers in futures markets, temporarily locking trading after extreme price moves. Limits for dollar-sterling futures normally range from 400 ticks to 1,600 ticks, in escalating progression.
The emergency action, in place to Friday, will double limits for currency contracts, bringing the range for the pound from 800 ticks to 3,200 ticks.
“The exchanges determined that there is a strong likelihood that the ‘Brexit’ vote may result in increased price volatility in CME FX and CME and CBOT Interest Rate futures products,” CME said in a notice to traders. “The emergency action is being taken as a precautionary measure and is intended to ensure fair and orderly trading in all these products”.
As CME was taking emergency action, it was also using Brexit vote as a marketing opportunity. In an email blast sent out early Thursday London time, the exchange operator touted its contracts.
Rarely has a mania escalated so rapidly, and spurred such fevered trading, as the great China commodities boom of 2016. Over the span of just two wild months, daily turnover on the nation’s futures markets has jumped by the equivalent of $183 billion, outpacing the headiest days of last year’s Chinese stock bubble and making volumes on the Nasdaq exchange in 2000 look tame.
Plenty of people get worked up about this sort of thing. Lots of disapproval. Maybe they don’t like people, ’cause this is just how people behave. Its happened before. It’ll happen again. Deal with it (and lighten up)
The plan includes the creation of an independent oil trading platform, Russia’s own crude benchmark as well as trading oil in rubles.
The St. Petersburg International Mercantile Exchange (Spimex), the country’s largest commodity exchange, is courting international oil traders to join its emerging futures market. Spimex’s chairman is Igor Sechin, who is also CEO of the Russian oil giant Rosneft.
The goal is to increase revenues from Urals crude by disconnecting the pricing mechanism from the Brent benchmark. Another goal is to stop quoting petroleum in US dollars.
“The goal is to create a system where Russian oil is priced and traded in a fair and straightforward way,” Spimex president Alexei Rybnikov said in an interview with Bloomberg.
The days of JP Morgan controlling the silver market may be numbered as a new player in the silver market has arrived. For the past several years, JP Morgan held the most silver on a public exchange in the world. While the LBMA may hold (or did hold) more silver, their stockpiles are not made public.
Regardless, JP Morgan held the most silver at nearly 74 million oz (Moz) in its warehouse, up until recently. Over the past two months, JP Morgan’s silver inventories have fallen nearly 7 Moz to 67.1 Moz today:
China’s market regulator may have succeeded in taking much of the froth off the country’s surging commodities markets last week, but the message is not filtering down to many dedicated retail traders.
As Chinese markets reopened on Tuesday after the May Day holiday, a few dozen young traders in Shanghai crowded into a small room provided by a local brokerage. The mostly 20-something male traders, dressed in jeans and T-shirts, were looking forward to another week of fevered risk-taking in China’s hottest new casino.
“It’s better for futures traders to be young because they can learn faster,” said Zhang Jun, 26, who has been trading commodities on the Shanghai Futures Exchange for three years but has only recently begun to make any money. “This is not relevant to anything you study before you get here. I don’t know anyone who studied a relevant major,” said Mr Zhang, a mechanical engineer by training.
China moved to clamp down on excessive speculation in commodities on Monday after weeks of frenzied trading boosted prices and ignited fears of another bubble in its domestic markets.
Activity on China’s largest commodity exchanges has surged in recent days with turnover in key steel contracts exceeding the combined volume of the Shanghai and Shenzhen stock exchanges on one day last week.
Investors around the world have zeroed in on the latest trading binge as the prices of many commodities have risen sharply, with iron ore gaining almost a third in just two weeks. Cash has started to flow into raw materials in part because Chinese officials imposed curbs on equities trading last year.
“China’s latest speculative spike has stunned global markets,” said Tom Price, a Morgan Stanley analyst.
Shanghai steel futures have risen more than 50 per cent this year and more than a fifth this month. Iron ore traded on the Dalian Commodity Exchange hit its highest level since September 2014 last week.
The surge led the country’s largest commodity trading venues — the Shanghai Futures Exchange, Dalian Commodity Exchange and Zhengzhou Commodities Exchange — to curb activity by lifting transaction costs, margins and daily trading limits on some contracts.
Looks like something big is about to take place on the Comex as Registered Gold inventories declined a whopping 73% in one day. This is a very suprising update as Comex Gold inventories haven’t experienced much movement over the past few months.
Well, this all changed today as a stunning 201,345 oz (73%) of the total 275,325 oz of Registered Gold was transferred to the Eligible Category today: