Commodity ETP Weekly – Investors buy into oil before price rise
• WTI oil ETP inflows surged to a seven-month high. • Investors buy gold on dips. • Inflows into US natural gas ETPs hit a 4-month high. • Upcoming webinar: Global commodities, have we reached the floor in prices?
A hawkish post-meeting statement from the Federal Open Market Committee drove the US dollar (DXY) temporarily higher, suppressing gains in many commodities. However, subdued PCE deflators and muted increases in wages took the edge off upward US dollar pressure by the end of the week and barring any surprises, commodities should be able to trade on their own fundamentals. The week has started off with the release of better-than-expected manufacturing China Caixin and Euro Area PMIs and the market expects a US ISM reading above the expansionary 50 marker, which could provide a cyclical boost for commodity market sentiment.
WTI oil ETP inflows surged to a seven-month high.WTI oil bounced 6.3% on Wednesday following a lower-than-expected inventory build last week. In the run-up to the announcement, investors piled into long WTI oil ETPs (totalling more than US$86.2mn, between Friday and Wednesday), before taking profit on the news, leaving net inflows for the week at US$66.4mn, the highest since March 2015. Many investors correctly believed that the prior week’s excessively high inventory build would not be repeated. Indeed rig counts in the US have been declining for 9 consecutive weeks and are currently 63% below the levels last year. More than US$200bn of CAPEX cuts have been announced across the industry and the effect of the stalled projects will soon bite into global oil supply and moderate the glut. Meanwhile with the Organization of the Petroleum Exporting Countries operating at close to capacity, the traditional role of the cartel – to increase production in times of outages elsewhere – will be compromised, increasing the risk of price shocks in the oil market.
Investors buy gold on dips. The Federal Reserve’s hawkish post-meeting statement send gold 2.6% lower on Thursday, driving US$15.8mn into long gold ETPs on the day. For the week as a whole, we saw more than $31.5mn of inflows into long gold products as investors position for a potential bounce back. With the Fed downplaying global risks and conditioning their next rate move on the domestic market, many see the next two labour market reports as a pivotal guide to the timing of first rate hike in nine years. However, sophisticated investors realise that the payroll numbers in the labour market report are not only volatile, but subject to frequent and significant revisions. Gold’s decline this week could once again turn out to be premature.
Inflows into US natural gas ETPs hit a 4-month high. Natural gas prices surged 11% on Thursday after the release of storage data, which showed inventory building below expectations. Investors bought US$7.2mn of long natural gas ETPs during the week. We are likely to see some profit-taking from this, as inventories still lie more than 1 standard deviation above their five-year average, and prospects for a warmer winter with El Niño affecting US weather could see some of the recent injections being underutilised.
Key events to watch this week. Markets will be focused on the non-farm payrolls numbers out at the end of this week. A disappointing September reading and large downward revisions to July and August estimates has set the tone for a sub-200k consensus expectation for October. However, for many FOMC Governors, including NY Fed’s Dudley, a figure of 120k-150k is enough to ‘push the unemployment rate lower’ and could pull the trigger to vote for a rate hike. Should this month’s reading disappoint, we could see gold rally as rate hike expectations get pushed further out.
Video Presentation
Nitesh Shah, Research Analyst at ETF Securities provides an analysis of last week’s performance, flow and trading activity in commodity exchange traded products and a look at the week ahead.
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ETF Securities Research team ETF Securities (UK) Limited T +44 (0) 207 448 4336 E info@etfsecurities.com
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Hashdex Nasdaq Crypto Index ETP, den största kryptoindexprodukten i Europa med över 500 miljoner USD i AUM, har nominerats till ETF Stream Awards 2024, i kategorin ”Digital Assets ETP Of The Year”!
Hashdex är glada över att se sitt engagemang för att tillhandahålla innovativ, reglerad tillgång till kryptotillgångsklassen erkänd. Detta erkännande belyser deras ledarskap när det gäller att utveckla kryptoinvesteringslösningar.
Hashdex Nasdaq Crypto Index ETP, den största kryptoindexprodukten i Europa med över 500 miljoner USD i AUM, har nominerats till ETF Stream Awards 2024, i kategorin ”Digital Assets ETP Of The Year”!
Detta erkännande belyser Hashdex engagemang för att tillhandahålla innovativa, robusta produkter som förenklar tillgången till kryptotillgångarnas värld. HDX1 erbjuder diversifierad exponering och tydlighet på en komplex marknad, vilket förkroppsligar Hashdex uppdrag att föra kryptons framtid in i nutiden av investeringar.
Prisutdelningen äger rum den 28 november i London, där Hashdex kommer att ansluta sig till branschens främsta ETF-spelare.
For years, India has been ramping up to contend with China as the region’s top technology leader. Pandemic-era supply chain issues hastened its successes in luring foreign tech firms. Now, equity investment flows are following suit. Dina Ting, Head of Global Index Portfolio Management at Franklin Templeton, highlights a few factors behind how the subcontinent is benefiting from rotational flows.
As China braces for renewed friction over President-elect Donald Trump’s tariff threats, investor flows may be following similar currents as those of regional supply chain shifts—that is to say, diversifying from China and toward opportunities in markets such as India and Japan.
After the People’s Bank of China revealed the most aggressive stimulus package it’s rolled out since the COVID-19 pandemic, China stock markets saw a short-lived rally at the end of September. A lack of detailed measures targeting consumption seems to have disappointed investors and led the bullish sentiment to deflate.
Adding to the country’s economic woes are societal changes like falling birthrates and a rapidly ageing population. Estimates by China’s National Health Commission suggest the country’s elderly population will grow to over 400 million by about 2035. To better cope with this crisis, China’s statutory retirement age will be extended, starting in January 2025, for the first time since the 1950s.
India investors, meanwhile, are finding the subcontinent—which has already overtaken China as the world’s most populous nation—appealing for its relative immunity to global risks, given its domestic-driven economy. Its younger labor force has also attracted a market pivot to this prime alternative to China manufacturing. For the 12-month period prior to China’s September 2024 stimulus announcement, US-listed India equity exchange traded funds (ETFs) garnered US$7.5 billion in flows—a sharp contrast to the US$6 billion in outflows experienced by China ETFs over the same period.1
Judging by India’s impressive initial public offering (IPO) environment, businesses there are feeling the optimism. The country’s 258 IPOs accounted for 30% of the global total by number by the end of September and 12% by the amount of money raised, in an economy that makes up just over 3% of global GDP.2
And investors in India are taking note. Aided by the improving digitalization of finance and increased internet access, India’s middle class is also an expanding retail investor class. By one measure, nationwide stock trading accounts nearly tripled from 2019 to 2023 to roughly 140 million.3
In dollar terms, total returns for Indian stocks have risen by 93% over the past five years, compared with about a 24% rise overall for emerging markets and drop of 5% for China stocks over the same period.
Many investors seeking to better diversify emerging market exposure or layer in targeted broad country allocation can tap single-country exchange-traded strategies.
Emerging markets in the Asia region are not the only beneficiaries of a potential US-China trade war. Earlier this year, investors were already driving up flows into Japan ETFs. Market watchers consider Japanese stocks to be indirect beneficiaries of Trump’s reflationary economic policy—which may keep interest rates high, thereby boosting the dollar and weakening the yen to the advantage of Japanese exporters.
The MSCI Japan Index is up nearly 21% in US dollar terms in the one-year period ending October 31, 2024. Consumer discretionary, financials and industrials holdings led gains during this time.
An element of uncertainty around the policies of a second Trump term, however, are still causing jitters around Asia, especially given the president-elect’s transactional approach to international relations.
Fortunately, Japan is seeing a renaissance in its semiconductor industry for which Tokyo is investing heavily (more than US$25 billion through 2025) and has established strong multilateral trade partnerships.
Japan has already elevated its role in global supply chain reorganization in recent years, and seeks to take advantage of its clout in joint free trade initiatives, such as the US’s Indo-Pacific Economic Framework for Prosperity to strengthen its regional supply-chain leadership.
iShares iBonds Dec 2030 Term EUR Corporate UCITSETF EUR (Dist) (30IG ETF) med ISIN IE000LX17BP9, strävar efter att spåra Bloomberg MSCI December 2030 Maturity EUR Corporate ESG Screened index. Bloomberg MSCI December 2030 Maturity EUR Corporate ESG Screened-index följer företagsobligationer i EUR. Indexet speglar inte ett konstant löptidsintervall (som är fallet med de flesta andra obligationsindex). Istället ingår endast obligationer som förfaller under det angivna året (här: 2030) i indexet. Indexet består av ESG (environmental, social and governance) screenade företagsobligationer. Betyg: Investment Grade. Löptid: december 2030 (Denna ETF kommer att stängas efteråt).
Den börshandlade fondens TER (total cost ratio) uppgår till 0,12 % p.a. iShares iBonds Dec 2030 Term EUR Corporate UCITSETF EUR (Dist) är den enda ETF som följer Bloomberg MSCI December 2030 Maturity EUR Corporate ESG Screened index. ETFen replikerar det underliggande indexets prestanda genom samplingsteknik (köper ett urval av de mest relevanta indexbeståndsdelarna). Ränteintäkterna (kupongerna) i ETFen delas ut till investerarna (kvartalsvis).
Denna ETF lanserades den 9 maj 2024 och har sin hemvist i Irland.
Varför 30IG?
Exponering mot företagsobligationer i euro denominerade i investeringsklass, skattepliktiga, fast ränta och som förfaller mellan 01/01/30 och 02/12/30
Det är en investeringsperiod i fonden att andelsägare den 02/12/30 kommer att få sina andelar inlösta utan ytterligare meddelande eller aktieägargodkännande den 30/03/12
Indexet tillämpar skärmar som exkluderar emittenter som är involverade i följande affärsområden/aktiviteter: tobak, kärnvapen, civila skjutvapen, kontroversiella vapen, termisk kolbrytning, generering av termisk kolkraft, oljesand, konventionella vapen och vapensystem/komponenter/ stödsystem/tjänster.
Investeringsmål
Fonden strävar efter att uppnå avkastning på din investering, genom en kombination av kapitaltillväxt och inkomst på fondens tillgångar, vilket återspeglar avkastningen från Bloomberg MSCI December 2030 Maturity EUR Corporate ESG Screened Index, fondens jämförelseindex.
Det betyder att det går att handla andelar i denna ETF genom de flesta svenska banker och Internetmäklare, till exempel DEGIRO, Nordnet, Aktieinvest och Avanza.