Crude keeps climbing, with benchmark prices up another 5% or so recently. Gold and silver are pulling back along with Treasuries, while equities are flattish and the dollar is up.
Oil is stealing the spotlight...again...after President Trump decided to keep blockading Iranian ports in an effort to force the country to the negotiating table. Since Iran has said it won’t stop threatening ship traffic through the Strait of Hormuz while that’s the case, traders are pricing in a “less global supply for longer” case. At last check, WTI was trading around $105 while Brent crude was changing hands near $110.
DBA, MAGS (YTD % Change)
Data by YCharts
Elsewhere in the energy world, the United Arab Emirates said it was giving up its membership in the OPEC cartel. The news follows years of simmering tensions between the UAE and Saudi Arabia, the group’s third-largest and largest producers, respectively. Absent the ongoing war, the move would likely have led oil prices to fall because the UAE’s departure would open the door to production increases. But it barely caused a dip given the geopolitical tensions in play.
Meanwhile, food prices are getting more attention as the conflict drags on. The Bloomberg Agriculture Spot Index tracks 10 food staples – and it just hit the highest level in 29 months. Key fertilizer ingredients aren’t making it out of the Persian Gulf, something that can reduce future crop output. Plus, higher diesel prices are driving up shipping costs for companies that transport ag commodities. That’s getting priced into markets, with the Invesco DB Agriculture Fund (DBA) now up 9.5% year-to-date.
Big Tech stocks waffled yesterday amid news of disappointing ChatGPT revenue and usage at OpenAI. Now, sector investors face a gamut of earnings reports that could make or break the biggest industry players.
Companies like Alphabet Inc. (GOOGL), Amazon.com Inc. (AMZN), and Meta Platforms Inc. (META) all report quarterly results after the bell today, while Apple Inc. (AAPL) will follow tomorrow. The Roundhill Magnificent Seven ETF (MAGS) is up 1.3% YTD heading into the big earnings reveals, slightly underperforming the 4.6% rise in the State Street SPDR S&P 500 ETF Trust (SPY).
