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ETF Securities reports largest weekly outflow from commodity ETPs for six months


In its weekly brief, ETF Securities writes that last week saw the largest weekly outflow from Diversified Commodity ETPs for six months at USD80 million. This was the largest weekly outflow in the sector since November 2016. The firm writes that rising inventory levels among individual commodities such as oil, iron ore and sugar have been a drag on prices this year.

“There was an additional trigger last week when Moody’s downgraded China’s sovereign credit ratings one notch due to concerns over gross debt levels and slowing growth. Among major asset classes, commodities have been among the worst performers this year. Energy, soft commodities and agriculture were the worst performing sub-sectors in May, with livestock and precious metals the best.

“Commodity Futures Trading Commission positioning data had highlighted commodities reaching a peak bullishness sentiment end-February 2017. This bullish sentiment has since unwound considerably, remaining just above its long-term average balance between bull and bears.”

Gold ETPs at USD52 million and Silver at USD26 million saw their largest outflows over the week. ETF Securities writes that after their strong outperformance this year, they saw profit-taking in both Silver and Gold ETPs.

“Gold prices are up 11 per cent and Silver prices 8 per cent year-to-date,” the firm writes. “Another catalyst for profittaking is the upcoming June 14th Federal Reserve meeting, where the market is still placing a near certainty to a hike.Industrial metals reacted to the China Debt downgrade with USD30 million in outflows from the Industrial Metals basket last week. Industrial metals were down on average -2 per cent following China’s sovereign downgrade by Moody’s, ETF Securities writes.

“In addition to the downgrade, consensus is expecting the upcoming May industrial production and fixed asset investment data in China to show a slowdown in growth.”

Technology related ETPs (Cybersecurity and Robo) had their 12th straight week of inflows, marking USD91 million of inflows year-to-date. ETF Securities writes that investor interest in Tech continues to be strong as tech indices break new post-dot-com bubble highs.

“Last week also saw inflows in both long and short European ETPs as investors reacted to news that there could be an earlier than expected Italian election. European economic momentum continues to look the strongest globally on survey data such as the PMIs.”

Finally, opportunistic inflows into Crude Oil (USD15 million), came after oil prices fell after the May 25th OPEC meeting as the market was expecting more aggressive production cuts. The firm notes that there were some opportunistic inflows on the back of the price drops.

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