Although American equity markets started the day on a high note, the Dow was up about 50 points at its high, equities sold off to close out the day as geopolitical events from around the world weighed on stocks. The Dow finished the day down 22 points while the S&P 500 and the Nasdaq posted slightly worse losses of 0.3% and 0.5%, respectively. Commodity markets also retreated as gold lost some of its safe haven appeal, falling by $6/oz. and oil retreated by close to 1.6% on news that Libyan rebels had taken control of a key oil port. Meanwhile, other commodity groups also suffered in the session as grains and softs were generally down across the board as sugar, cotton, and corn led on the downside with all three losing at least 2.7% in the session.
One of the biggest winners in the ETFdb 60 was the iPath S&P 500 VIX Short-Term Futures ETN (VXX) which rose by 1.3% on the day. Today’s gains for the popular ETN came despite low volume and a generally low-volatility session; VXX saw just 12.6 million shares trade hands or about three million less than its daily average. In fact, VXX was down or flat for most of the day until a rally in the final two hours of trading helped to spur the fund to gains for the day. This late day surge came about thanks to numerous developments across the globe which helped to spike demand for the main ETN tracking the fear index. Protests broke out across the Middle East hitting Syria, Jordan, and Yemen, while the crisis in Japan continued to deteriorate as the nuclear situation remains tense and some are speculating that TEPCO will be nationalized by the Japanese government in the coming days in order to prevent the crisis from getting any bigger. All of this helped to increase investor interest in VXX and was the reason that many traders bought up the ETN before the market’s close [see charts of VXX here].
One of the biggest losers on the day was the United States Natural Gas Fund (UNG) which tumbled by 2.0% in Monday trading. UNG rose modestly in the start of the session, but soon sold off as traders locked in profits from the fuel’s run up to levels unseen in nearly two months. Curiously, the vast majority of activity took place between two and three in the afternoon as UNG slid from its high in the session to its low in a matter of minutes. In this short span, UNG tumbled from the 11.87 mark to below 11.60 where it finished the trading session. Despite this loss, UNG is still up 13.5% over the past two weeks and 4.1% in the past week alone, suggesting that demand for the fuel is spiking even though we are getting very close to April and the end of the heating season [see technicals of UNG here].
Disclosure: No positions at time of writing.