Gold Becomes the Biggest Winner of 2016 as US Stocks Rise & Crude Rallies

Week 10, 2016

U.S. stocks pared gains in light afternoon trading, with the Standard & Poor’s 500 Index poised to halt two months of losses, as higher crude and a falling dollar lifted commodities shares. The yen strengthened with gold.

The S&P 500 headed for its first monthly gain since November, with the gauge holding at a seven-week high amid trading volume 32 percent below the 30-day average at this time of day. Global equities were little changed, set for a fourth monthly loss amid continued concern about the worldwide economy.

What’s Happening in the Markets this week

• Gold Becomes the Biggest Winner of 2016. Gold’s come back is dominating 2016. The precious metal is the year’s best-performing major asset. Its 15 percent gain is topping gauges of high-yield and investment grade bonds, Treasuries, all currencies and major stock indexes in developing and emerging countries.
• Stocks Drop With U.S. Futures as G-20 Underwhelms;  Yen Advances. Asian and European stocks fell with U.S. equity futures after Group of 20 finance chiefs made only vague commitments to spur growth at a Shanghai meeting. Japan’s yen rose with gold as haven assets were favored.

Commodities in Review

• Bullish Oil Bets Rise as Hedge Funds See Crude Supply Tightening. Talk of an output freeze by OPEC and Russia along with falling U.S. production spurred money managers to bet oil is ready for a rebound.
• Gold Heads for Biggest Monthly Gain in Four Years as ETFs Expand. Gold is headed for the biggest monthly advance in four years as a darkening global outlook spurs demand for haven assets. As bullion advanced and analysts boosted price targets, holdings in exchange-traded funds have risen to the highest level in almost 17 months.

USA

• Fed Dots Don’t Connect for Bond Traders Scorning Rate-Hike Path. The derivatives market is sending unprecedented signals that the Federal Reserve is mistaken in its policy-rate path. Even as officials argue that higher borrowing costs are warranted, the bond world sees the potential for the shortest cycle of rate increases in almost two decades.

UK

• U.K. Stocks Wipe Out February Slump With Rally in Mining Shares. British equities rode advances in mining stocks to advance for a second day, erasing losses from this month’s rout that afflicted most of the region’s stocks. The FTSE 100 Index advanced 1.4 percent on Friday, rising to a Jan. 5 high and trimming this year’s decline to 2.3 percent. The decline still makes the benchmark the best performer among developed markets in Europe.

Europe

• Europe Stocks Fall After Two Weekly Gains. European equities slipped for the first time in three days on concern over central-bank stimulus. Inflation data on Monday will probably show the return of price stagnation. European equities rallied for a second week, boosted by gains at some companies that reported earnings and a rebound in financial firms, which remain the worst performers among Stoxx 600 industries for the year.

Asia

• China Stocks Tumble Toward 15-Month Low as Stimulus Bets Unwind. Chinese stocks fell, with the benchmark index approaching the lowest level since November 2014, as some investors were disappointed by a lack of specific measures to boost growth during the G20 meetings in Shanghai. 
• The Shanghai Composite Index dropped as much as 4.6%. The measure has declined 24 percent this year, the worst performer among 93 global equity indexes, on concern capital outflows will accelerate and earnings deteriorate as the economic slowdown deepens.

Emerging Markets

• Emerging Stocks in Fourth Monthly Decline as China Rout Extends. Emerging-market stocks were set to drop for a fourth month as Chinese equities and crude oil extended declines. 
• The MSCI Emerging Markets Index fell 0.5 percent to 736.01 as of 8:33 a.m. in London. The measure has retreated 0.9 percent in February, the smallest decline since October 2012, and its run of monthly losses is the longest since last September.

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