S&P 500 Hits Record Close

MARKETS

The multi-week decline in the US dollar continued with force on Tuesday, taking the euro to fresh 2-year highs, the Aussie dollar to a new 2020 high and the British pound very close to one. 

The S&P 500 finally made a record closing high at 3389.78 but it was a mixed session that saw the Dow and Russell 2000 both close lower. Chinese shares edged higher on Tuesday while South Korea was the big regional underperformer dropping over 2% amid local concern of a second wave after 246 daily coronavirus cases were reported.

Spot gold prices reached back over $2000 per oz while silver was over $28. Oil prices pulled back ahead of a big meeting of OPEC and its allies known as OPEC+
 

GURU WISDOM

“I can calculate the motions of the heavenly bodies, but not the madness of people.” – Isaac Newton
 

USD & Corn

There is no single explanation for the greenback’s decline. The lack of desire for a haven asset while stock markets are rising probably best explains today’s move. US President Trump announced China made the biggest order of American corn ever last week as part of a rise in farm goods purchases in the phase one trade deal. So despite thorny political relations, the trade deal looks in good shape, which is a positive for risky assets.
 

Oil & OPEC

There is no decision being taken on production levels at this OPEC meeting so investors are really just waiting on confirmation that the plans agreed in July are going ahead. The cartel is planning to return about 1.5 million barrels of oil a day to the market this month after slashing 10% of global output in response to the demand shock caused by the pandemic and travel restrictions. 

The price of oil has surged since its low in March when WTI flipped into negative pricing. Brent crude has rallied from $17 to $45 per barrel but stalled around the highs for the last month. An extension of the trend has been difficult while oil demand expectations remain so low. There is no single metric for fuel demand to measure but earnings guidance from the Big Oil companies in Q2 was bleak.