American equity markets rose modestly in Wednesday’s session as gains in the technology and basic materials sector helped to carry the market slightly higher on the day. The Dow gained 68 points while the S&P 500 rose by just 0.3% and the Nasdaq gained 0.5%, boosted in large part by solid performances out of the semiconductor sector. Financials were hit relatively hard as Bank of America led on the downside, losing 1.7% in the session as its request to increase its dividend was denied by the Federal Reserve. However, competitor Citigroup received the green light from the central bank. Commodity markets were more mixed on the day as the headline commodities of gold and oil posted gains on the day of 0.8% and 0.4%, respectively. But softs and grains were broadly lower, led by a 2.1% decline in sugar and a 2% slump in cotton. Copper, on the other hand, managed to recoup more of its recent losses, surging by over 12 cents a pound, hitting the $4.43 mark in late Wednesday trading.
One of the biggest ETF winners on the day was the Market Vectors Gold Miners ETF (GDX), which surged higher by 3.6% during Wednesday’s session. Today’s gains in GDX came as gold futures settled at a record high and traders continued to fear the specter of inflation thanks to soaring crude and continued turmoil in both North Africa and Japan. Geopolitical risks, which came in the form of continued airstrikes in Libya and radiation in Tokyo tap water, both helped to moderate demand for risky assets and increase investor buying of gold and other safe havens. “It would be hard to imagine a more bullish scenario for gold and silver given the real macroeconomic and geopolitical uncertainty and risk in the world today,” a note from Dublin-based bullion dealer GoldCore said [see holdings of GDX here].
One of the biggest losers in the ETFdb 60 was the PowerShares DB Agriculture Fund (DBA), which fell by 1% on the day. DBA is heavily allocated to grain and soft commodities, which were among the biggest losers on the day. The fund puts roughly one-eighth of its holdings in corn, soybeans, sugar, and live cattle futures, and all four were down on the day with soybeans and sugar losing more than 1.7% each in the session. Other soft commodities which make up a sizable portion of DBA, such as cocoa and coffee, also retreated, highlighting the broad weakness in the sector during Wednesday’s session. Nonetheless, DBA has seen a pretty solid week of trading, gaining close to 5% over the past five days despite the recent sell-off [see more on DBA's fact sheet].
Disclosure: No positions at time of writing.