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Crude oil leads S&P GSCI lower in May

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The S&P GSCI, a benchmark for investment performance in the commodity markets, ended May with a 13.19 per cent decline as global economic concerns pressured the index during the month, according to Standard & Poor’s.

Energy (-15.92 per cent) was the worst performing sector in May, while precious metals (+2.33 per cent) was the only sector to post a positive monthly return.
 
“Economic sensitive assets were highly correlated in May, as the 14 per cent plunge in front month crude oil futures drove down the returns of several other S&P GSCI components,” says Michael McGlone, director of commodity indexing at S&P Indices. “When the world’s most widely traded commodity futures contract declines this rapidly, it often has a tendency to impact most other commodities, and that certainly was the case with crude oil in May.”
 
In May, crude oil futures witnessed its largest monthly percentage decline since December 2008 as the S&P GSCI Energy Index fell 15.92 per cent during the month. Year-to-date, the index has fallen back into negative territory with a decline of 11.99 per cent.
 
Flight to safety and risk reduction was also at play in May, as strength in gold led the S&P GSCI Precious Metals Index to post a 2.33 per cent monthly gain despite a 10.56 per cent decline in the S&P GSCI Industrial Metals Index.
 
The S&P GSCI ended May with a year-to-date decline of 11.58 per cent, accompanied by a 14.21 per cent YTD decline in the euro currency versus the US dollar.  By the end of May, only the S&P GSCI precious metals and livestock sector indices maintained year-to-date gains.
 
Enhanced indices fared a bit better in May, as measured by the 11.80 per cent decline in the S&P GSCI Enhanced Index, which is now registering a year-to-date loss of 8.58 per cent.

The 12.01 per cent monthly decline in the S&P GSCI 3-Month Forward Index has now resulted in a 8.49 per cent year-to-date decline for the index.

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