Behold the April Commodities Surge
April is in the books and, for equities, it was another winning month added on to a winning year-to-date performance. The S&P 500 finished the month up 0.85%, but that was a bit deceptive, as the index sold off about 1% on April 30. That decline trimmed the bullish mood a bit, but still the S&P 500 is up 3.3% through the first four months of the year.
Stocks in broad-based international markets are doing much better than their domestic counterparts. For example, the iShares MSCI EAFE Index (EFA) was up 3.65% in April, and year to date the benchmark international fund is up 9.32%.
A really big region for equally big equity performance is China. The iShares China Large Cap (FXI) spiked 15.6% in April, and year to date the fund is up 23.3%.
While the outperformance of international equities, and specifically China, vs. domestic stocks is something subscribers to my Successful ETF Investing newsletter have benefitted from all year, the real surprise action in the markets in April was in commodities.
Both oil and gold stocks were up huge last month, and now we need to watch these trends to see if and/or when they might start really affecting other markets.
In the oil patch, we saw the iPath S&P GSCI Crude Oil TR ETN (OIL) surge 24% during the month, as oil extricated itself from its multi-month plunge. Oil prices now are back above the 200-day moving average, a development that will be met with ambivalence from both bulls and bears.
On the precious metals front, we have the Philadelphia Gold & Silver Index ($XAU), up some 11.3% in April. This measure of gold and silver mining stocks is indicative of speculation that gold and silver prices will be heading higher soon, although we haven’t seen that speculation reflected in the actual spot price of gold or silver.
I expect the trends here of international vs. domestic stock outperformance to continue in May. As for oil and gold and silver mining stocks, that’s the bigger unknown right now — and that’s why we’ll be monitoring this area closely going forward.
Jim Woods is a 30-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor.
His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. Read more about Jim Woods.
