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 Laila Kearney and Georgina McCartney
LONDON (Reuters) -Oil prices slipped on Friday and were on track for a third consecutive weekly decline, pressured by muted demand in China and hopes of a Gaza ceasefire deal that could ease Middle East tensions and accompanying supply concerns.
futures for September dipped 56 cents to $81.81 a barrel by 1250 GMT. U.S. West Texas Intermediate crude for September fell 40 cents to $77.88.
For the week, Brent is trading down almost 1% while WTI is down more than 2%.
Recent data, such as July 20 figures showing that China’s total fuel oil imports dropped 11% in the first half of 2024, have raised concern about the wider demand outlook in China.
In the Middle East, hopes of a ceasefire in Gaza have been gaining momentum.
A ceasefire has been the subject of negotiations for months, but U.S. officials believe the parties are closer than ever to an agreement for a six-week ceasefire in exchange for the release by Hamas of female, sick, elderly and wounded hostages.
Oil price declines were capped, however, by threats to production from Canadian wildfires, a large stocks draw and continued hopes of a September cut to U.S. interest rates after strong economic data, said PVM oil analyst Tamas Varga.
Investing.com– Oil prices fell Friday, on course for a third consecutive losing week as concerns over sluggish demand conditions in Asia weighed.
At 09:00 ET (13:00 GMT), fell 0.9% to $81.62 a barrel, and dropped 0.8% to $77.66 a barrel.
Crude set for third straight week of losses
Both benchmarks are on course for another losing week, the third in succession, with down just under 1% and WTI nearly 3% lower.
Persistent concerns over slowing growth and demand in top importer China have been the dominant factor, part triggered by GDP data from last week, which showed the Chinese economy grew less than expected in the second quarter.
Additionally, more data this week showed the country’s apparent oil demand fell 8.1% to 13.66 million barrels per day in June.
Beijing unexpectedly cut a swathe of lending rates this week, further trying to loosen monetary policy amid growing concerns over sluggish growth.
Apart from China, uncertainty over Japan also grew following middling , while weak activity data in Europe also pointed to economic woes.
Gaza ceasefire in focus
Also weighing on the crude market have been increasing hopes of a ceasefire in Gaza.
The leaders of Australia, New Zealand and Canada called for an immediate ceasefire in a joint statement on Friday, while U.S. Vice President Kamala Harris has pressed Israeli Prime Minister Benjamin Netanyahu to help efforts at reaching a deal, striking a tougher tone than President Joe Biden.
A ceasefire has been talked about for months, but if it was to occur then some of the risk premium could be removed from the market.
Strong US GDP, rate cut hopes offer some support
On the flip side, data, released on Thursday, showed that the U.S. economy grew more than expected in the second quarter, despite pressure from high rates and relatively sticky inflation.
The reading drove up hopes that the world’s biggest fuel consumer was headed for a “soft landing,” where economic growth remained steady while inflation eased.
These hopes were also lifted by the data showing overall U.S. inflation cooled as expected in June.
According to data from the Bureau of Economic Analysis, the (PCE) price index slipped to 2.5% in June, from 2.6% the prior month. .
Stripping out volatile items like food and fuel, the year-on-year “core” gauge, widely known as the Fed’s preferred gauge of inflation, remained at 2.6%, only marginally above the Federal Reserve’s 2% target.
This sparked increased optimism over a potential interest rate cut by the Federal Reserve in September.
Data showing steady drawdowns in U.S. also offered some positive cues to oil markets, as fuel demand in the country remained robust amid the travel-heavy summer season.
(Ambar Warrick contributed to this article.)
(Reuters) -A wildfire reached the Canadian town of Jasper, Alberta on Wednesday, one of hundreds ravaging the western provinces of Alberta and British Columbia, as firefighters battled to save key facilities such as the Trans Mountain Pipeline, authorities said.
Wildfires burning uncontrolled across the region include 433 in British Columbia and 176 in Alberta, more than a dozen of them in the area of Fort McMurray, an oil sands hub.
The pipeline, which can carry 890,000 barrels per day (bpd) of oil from Edmonton to Vancouver, runs through a national park in the Canadian Rockies near the picturesque tourist town, from which about 25,000 people were forced to evacuate on Tuesday.
“Firefighters … are working to save as many structures as possible and protect critical infrastructure, including the wastewater treatment plant, communications facilities, the Trans Mountain Pipeline,” Parks Canada said in a post on Facebook (NASDAQ:).
The pipeline operator did not immediately respond to a Reuters request for comment, but said earlier it was safely operating the pipeline and had deployed sprinkler protection as a preventive measure.
In the day’s last update, Jasper National Park said it could not report on the extent of damage to specific locations or neighbourhoods, and that it would provide further updates on Thursday.
Canadian Prime Minister Justin Trudeau said his government approved Alberta’s request for federal assistance.
“We’re deploying Canadian Armed Forces resources, evacuations support, and more emergency wildfire resources to the province immediately – and we’re coordinating firefighting and airlift assistance. Alberta, we’re with you.”
The town, and the park, which draws more than two million tourists a year, were evacuated on Monday night, at a time when officials estimated there were 15,000 visitors in the park.
Deteriorating air quality forced firefighters and others lacking breathing equipment to evacuate to the town of Hinton, about 100 km (62 miles) away, park authorities said on Facebook on Wednesday evening.
Officials of Parks Canada earlier said they expected rain to arrive overnight.
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