Commodities
U.S. equity funds shed $2.1 trillion in the quarter
The bear market set a record. From April to June, U.S. equity funds’ net assets fell 18.6%, or $2.1 trillion, the largest quarterly loss in history for them.
The bear market in U.S. stocks that began this year continues to break records both in the amount of investor funds evaporating and in the rate at which money is fleeing falling assets. The S&P 500 broad market index lost 16.45% in the second quarter, but assets of funds investing in U.S. stocks appeared to have declined even more.
As reported on Monday, citing data from Refinitiv Lipper Reuters, in the second quarter, there was a record reduction in their net assets – by $2.1 trillion – to $9.2 trillion. This, as the agency notes, is the maximum quarterly loss for such funds in history.
In relative terms, this corresponds to a drop of 18.6%, clearly more than the S&P 500. But although it is called a broad market index, the market itself is much broader, and the real structure of fund ownership and investment is different from any index. In addition to the serious drop in stock prices, the size of assets was also affected by investors taking money out.
According to Refinitiv Lipper, last week was the third week in a row that saw an outflow of money from U.S. equity funds. Generally speaking, there have been longer series of outflows this year. This is entirely unsurprising given that the entire first half of the year was also one of the darkest in history for U.S. stocks.
For the S&P 500, the first six months of 2022 were its worst since 1970, losing 20.6% during that period. For the Dow Jones Industrial Average, down 15.3%, it was its worst start to a year since 1962. For the younger Nasdaq Composite, which appeared only in 1971, it was the weakest first half of the year ever (minus 29.5%).
The Vanguard Total Stock Market Index Fund, Inst +, SPDR S&P 500 ETF Trust and Vanguard 500 Index Fund, Admiral showed the biggest declines in absolute terms in the second quarter. They lost $77.5 billion, $70.5 billion and $69.3 billion in net assets, respectively.
The rest of the Top 10 funds by falling assets are, of course, among the largest by absolute size and represent such giants as Fidelity, Vanguard, BlackRock and others. And the top 9 places are occupied by index-tracking funds.
Obviously, against the backdrop of a falling market, the ability to track its dynamics as accurately as possible no longer seems as good an idea to everyone as it used to be. This, however, is commonplace and not really related to the type of funds. Back in the 1980s and 90s, studies were conducted to show that the public was constantly hurting itself.
At that time managers were taking higher commissions than they do now, and these commissions were also higher than at index funds, which gained popularity in recent decades. So their yields were generally supposed to be lower, but they still did show it (and not so small). But in fact, in the long-term, the mass investor got just a small share of it.
The reason was in constant attempts to guess the right moment to buy or sell stocks or other instruments, and also to choose a fund which would be best suited for this. After many attempts people, firstly, just did not guess, and secondly, paid much higher commissions, additionally reducing profitability. As a result, a strategy like “buy and hold” turned out to be an order of magnitude more effective. Now the stock industry has changed noticeably.
By Nicole Jao
NEW YORK (Reuters) -Oil prices edged lower on Monday in thin trade ahead of the Christmas holiday on concerns about a supply surplus next year and a strengthened dollar.
futures settled down 31 cents, or 0.43%, at $72.63 a barrel. U.S. West Texas Intermediate crude futures fell 22 cents, or 0.32%, to $69.24 a barrel.
Macquarie analysts projected a growing supply surplus for next year, which will hold Brent prices to an average of $70.50 a barrel, down from this year’s average of $79.64, they said in a December report.
Concerns about European supply eased on reports the Druzhba pipeline, which sends Russian and Kazakh oil to Hungary, Slovakia, the Czech Republic and Germany, has restarted after halting on Thursday due to technical problems at a Russian pumping station.
The U.S. dollar was hovering around two-year highs on Monday morning, after hitting that milestone on Friday.
“With the U.S. dollar changing from weaker to stronger, oil prices have given up earlier gains,” UBS analyst Giovanni Staunovo said.
A stronger dollar makes oil more expensive for holders of other currencies.
On Friday, U.S. data that showed cooling inflation helped alleviate concerns after the Federal Reserve interest rate cut last week.
“With the Fed sending mixed signals and some of these economic data points not being all that robust, the market is listless,” said John Kilduff, partner at Again Capital in New York.
Brent futures fell by around 2.1% last week, while WTI futures lost 2.6%, on concerns about global economic growth and oil demand after the U.S. central bank signalled caution over further easing of monetary policy.
Research from Asia’s top refiner Sinopec (OTC:) pointing to China’s oil consumption peaking in 2027 also weighed on prices.
U.S. President-elect Donald Trump on Friday urged the European Union to increase U.S. oil and gas imports or face tariffs on the bloc’s exports.
Trump also threatened to reassert U.S. control over the Panama Canal on Sunday, accusing Panama of charging excessive rates to use the Central American passage and drawing a sharp rebuke from Panamanian President Jose Raul Mulino.
Investing.com– Gold prices edged higher on Tuesday, extending their tepid performance as investors still remained cautious with the rising dollar following the U.S. Federal Reserve’s hawkish tilt.
Traders also refrained from placing large bets ahead of a shortened trading week due to the Christmas holiday.
inched up 0.2% to $2,616.95 per ounce, while expiring in February ticked up 0.2% to $2,633.89 an ounce.
The yellow metal had inched up 0.3% on Monday, after losing more than 1% in the previous week, reflecting uncertainty about the metal’s outlook.
Bullion under pressure on Fed rate outlook
Gold prices had hit a one-month low on Wednesday, as the Fed meeting indicated that rates will remain higher for a longer period after Wednesday’s cut.
Prices have failed to fully recover from it and have seen subdued moves as investors still assessed the implications of the Fed’s rate outlook.
Higher interest rates put downward pressure on gold as, as the opportunity cost of holding gold increases, making it more attractive compared to interest-bearing assets like bonds.
Traders are now expecting only two quarter-point reductions in 2025 amid continued economic resilience and still-elevated inflation. This compares to expectations of four rate cuts before the Fed meeting.
Strong dollar creates downward pressure on gold, other metals
The Fed’s hawkish shift provided renewed strength to the U.S. dollar, as higher interest rates make the greenback more attractive due to increased returns on dollar-denominated assets.
The rose 0.1% in Asia hours on Tuesday and hovered near a two-year high it reached last week.
A stronger dollar often weighs on gold prices as it makes the yellow metal more expensive for buyers using other currencies.
Other precious metals were largely muted. inched up 1.2% to $960.15 an ounce, while gained 0.3% to $30.265 an ounce.
Copper subdued on strong dollar, seasonal factors
Among industrial metals, copper prices were subdued and moved within tight ranges on Tuesday as a strong greenback weighed on the red metal.
Analysts attributed the weakness in copper to seasonal sluggishness as industrial production and construction projects often slow down as businesses and projects prepare for year-end closures and holidays.
Benchmark on the London Metal Exchange were largely unchanged at $8,954.50 a ton, while one-month were 0.5% higher at $4.1045 a pound.
Investing.com– Oil prices rose Tuesday, but stuck to a tight trading range as traders remained uncertain over a potential supply glut and softening demand in the coming year.
At 11:58 ET (17:58 GMT), rose 1.1% to $73.44 a barrel, and rose 1.2% to $70.03 a barrel.
Trading volumes were thin ahead of the Christmas holiday, while strength in the dollar also weighed on oil prices after the Federal Reserve signaled a slower pace of rate cuts in 2025.
Oil nurses losses in 2024 as demand jitters weigh
and WTI prices were down about 5% so far in 2024, with persistent concerns over slowing demand in China being a key point of pressure.
Chinese oil imports steadily dropped this year as the world’s largest oil importer struggled with slowing economic growth. While the country did outline plans to ramp up fiscal spending and stimulus measures in the coming year, markets were still holding out for more clarity on the planned measures.
Increased electric vehicle adoption in China also undermined fuel demand in the country.
Both the OPEC and the IEA have forecast slower demand growth in 2025 due to slowing demand in China. The country is also expected to face increased economic headwinds from a renewed trade war with the U.S. under Donald Trump.
Supply uncertainty spurs caution; US inventory data awaited
Oil markets were on edge over a potential supply glut in 2025. While the OPEC recently agreed to extend its ongoing supply cuts until at least mid-2025, production elsewhere could potentially increase.
US oil production remained close to record highs, and could potentially increase in the coming year, especially as Trump vowed to ramp up domestic energy production.
US inventory data, from the , is due later Tuesday and is set to offer more cues on oil production and supply.
(Peter Nurse contributed to this article.)
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