Fears of a slowdown in China caused a rollercoaster trading week according to ETF Securities.
Aneeka Gupta, Associate Research Analyst at ETF Securities, says: “Like most cyclical assets, commodities had an especially volatile week. Fears of a China slowdown following an equity market rout, led to the initial commodity price declines. However, the Bloomberg Commodity Index ended the week higher, driven by gains in oil and copper. Oil prices marked their strongest three day rally since 1990 after speculation the Organization of the Petroleum Exporting Countries may be considering cutting production. All eyes will be on the latest US jobs data and guidance by the ECB policymakers on quantitative easing amidst the global market rout.”
Oil ETPs enjoyed their ninth consecutive week of inflows. The firm writes: “After nose-diving to their lowest levels since 2009 last Tuesday, WTI and Brent crude oil prices staged their biggest one day surge on Thursday advancing 10 percent to US$43.5 and US$48.5 respectively. Over the past three trading sessions, WTI oil has surged 27 per cent on hopes that OPEC will consider cutting production.”
Long oil ETPs attracted US$60.1million after better than expected US GDP data revived hopes of strong demand. ETFS Daily Leveraged Natural Gas (LNGA) saw its second week of inflows (of US$2.7 million) as bargain hunters attempt to capture any price recovery before the high demand summer driving season draws to a close, ETF Securities reports.
Industrial metals ETPs witness highest outflows in seven weeks, led by ETFS Copper (COPA). Despite copper ending the week higher, its volatile price and fears of a China slowdown led to US$16.5 million redemptions in COPA.
Gold ETPs see the second consecutive week of inflows of USD$19.1 million. Gold maintained its safe haven status amidst the volatility in cyclical assets. “Investors bought US$15.2 million physical gold ETPs last week. Despite the futures market and consensus expectations for a US rate increase being pushed out, gold fell 2.5 per cent as a stronger-than-expected GDP reading for Q2 2015 underscores the strength in the underlying economy", writes ETF Securities.
Investors trimmed exposure to ETFS Agriculture (AIGA) by US$13.7 million, the highest level in seven weeks. “Sugar was the best performer among commodities as wetter weather in Brazil and fears of the El Nino impacting production in India and Thailand lent support to price. Hot dry weather impacted EU supply, benefiting corn prices as the International Grains Council (IGC) forecasted a supply deficit of four million tons. Wheat prices came under pressure as the IGC predicted an annual surplus of four million tons as global wheat production is expected to reach last year’s record level ten million tons.”