U.S. equity markets rose modestly in the session as strong performances in the financial sector helped to carry the markets higher on the day. The Dow rose by 33 points while the Nasdaq and S&P 500 posted similar gains of 0.3% and 0.2%, respectively. Commodity markets also finished broadly higher, as oil trended to the upside and gold continued its record surge, gaining $9/oz. on the day. Other commodities, namely the rest of the metals group and cotton in the softs, rose broadly as well, although there was some weakness in coffee, sugar, and natural gas. Meanwhile, traders continued to sell-off Treasury bond holdings ahead of tomorrow’s reports from the ECB and BoE; the 10-Year note saw its rate surge seven basis points to the 3.55% level while the two year finished the day yielding 0.84%.
One of the biggest winners on the day was the PowerShares DB Base Metals Fund (DBB) which surged by 2.6% in Wednesday trading. Today’s gains were largely thanks to copper’s solid performance on the day as the red metal gained more than 2% due to growing optimism over the pace of the global economic recovery. This was further confirmed by recent data that came out of Germany, one of the most important industrial nations in terms of manufacturing demand. In the recent report, Germany revealed that manufacturing orders climbed 2.4% in February, crushing analyst expectations of a 0.5% increase. This along with a similar, albeit less robust report from the Chicago Fed, is leaving many traders feeling quite optimistic over copper’s future, leading to a buying spree of DBB during Wednesday’s session [see more on DBB's fact sheet].
One of the biggest losers in the ETFdb 60 was the United States Natural Gas Fund (UNG) which tumbled by 2% on the day. Today’s losses were largely the result of a mild weather forecast in much of the Midwest and Eastern part of the country, possibly leading to smaller drawdowns of the popular heating fuel in the weeks ahead. “So far, temperatures are relatively moderate,” said John Woods, a trader with JJ Woods Associates. “There hasn’t really been a push in any direction.” As a result, demand for UNG slumped during today’s session, pushing the fuel down 3.1% over the past week. Prices do not look good in the short-term either as the temperature continue to remain in the low 50s-60s across much of the country pushing the fuel into one of the few seasons in which natural gas demand is likely to be limited, allowing supplies to build up significantly heading into the summer cooling season [see more charts of UNG here].
Disclosure: No positions at time of writing.