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 Crude Oil Continuous Contract (CL.F) & Platinum Continuous Contract (PL.F)

2021 is off to a generally positive start although two of the three trading days so far have seen significant intraday swings and reversals, to the downside on Monday and then to the upside on Wednesday. Defensive havens such as Gold and Silver have mirrored equity market action, rallying on Monday and then retreating on Wednesday.

Investors have been responding positively to indications that the long US election campaign is finally ending with the Democrats poised to take control of both the Senate and the White House away from the Republicans this month. As vaccine rollouts continue, investors appear to be taking a positive stance, looking over the valley of near-term lockdowns toward potential reopenings later in the year. Breadth remains positive as well with the Russell 2000 soaring to a new all-time high this week.

Commodities have also continued to rally this week both on an absolute and relative basis with Commodities leapfrogging over the equity asset classes to take over top spot in the SIA Charts Asset Class Rankings this week. Crude Oil has been leading the charge, climbing on the news that Saudi Arabia is planning a voluntary 1 mmbbl/d production cut for the next two months to offset the negative impact of lockdowns on demand. Meanwhile, economically sensitive metals like Copper and Platinum also continue to rally. The US 10-year treasury note yield has regained 1.00% this week, also a sign of investors anticipating an economic recovery. Gains in commodity prices have also been having a positive impact on resource stocks and in countries where resource stocks have a higher weighting including Canada, Australia, Russia, Mexico, Norway and Saudi Arabia, just to name a few.

Economic data has been mixed so far this week. US ISM manufacturing PMI beat expectations, but US construction spending and ADP payrolls fell short of expectations, the latter actually declining in December as new lockdowns started to take their toll. The coming days bring a number of key economic reports including US nonfarm payrolls and Canadian employment on Friday, and then US retail sales later next week. Earnings season doesn’t start until Friday the 14th and then picks up over the following two weeks. Confession season has been quiet so far.

In this week’s issue of Equity Leaders Weekly, we focus on action in Commodities, particularly Crude Oil and Platinum.

Crude Oil Continuous Contract (CL.F) 

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