Equity markets started October in much the same way they began last month; higher thanks to solid data. The Dow and S&P 500 both gained roughly 0.4% while the tech heavy Nasdaq rose by a more modest 0.1%. Precious metals and other commodities also soared as gold continued its march higher, finishing the day at the $1,320/oz. mark; oil soared up past the $81.50/bbl. level. Meanwhile in currency markets, the euro rose once again, as the greenback finished the week 1.1% lower against the common currency in Friday trading.
Today’s gains were powered by strong construction spending and robust consumer confidence levels, which both came in ahead of expectations. This news led to quality performances out of the big names in the financial and basic materials sectors including a 4.6% gain for Citigroup, a 3.1% gain for Occidental Petroleum, and a 4.4% surge by major copper producer Freeport McMoRan. However, technology continued its short term underperformance thanks to weakness out of the semiconductor sector and a 3.3% loss by Hewlett Packard.
One of the biggest winners on the day was the Dow Jones Wilshire International Real Estate SPDR (RWX), which rose by 1.6% to start the month. These gains were largely a result of continued weakness in the dollar, which in addition to weakening against the euro saw its value fall against the Japanese yen and the Australian dollar as well. In fact, the dollar index is now at its lowest level since early January of this year. Thanks in part to this, RWX has been surging as of late, having posted a 23.8% gain over the past three months and a 4.8% gain just this week [see fundamentals of RWX here].
One of the biggest losers in the ETFdb 60 was the PowerShares DB Agriculture Fund (DBA), which fell by 3% in Friday trading. This sharp loss was due to broad losses in the grain and softs sectors, especially in the important commodities of corn, cotton, soybeans, and wheat, which all showed losses of at least 2.8% on the day. But by far the biggest loser on the day was corn which sank by close to 6.1% to start October, the biggest drop since January. “Supplies are more comfortable on paper, and that has reduced the sense of urgency for end-users to jump back into the market and add to positions,” said Shawn McCambridge, the senior grain analyst at Prudential Bache Commodities LLC in Chicago [see charts of DBA here].
Disclosure: No positions at time of writing.