Commodities prices rebounded last week after a run of declines, posting the strongest weekly performance for the major asset classes, based on a set of exchange-traded funds.
Foreign stocks were in close pursuit for the performance leadership during the trading week ended Oct. 11.
A key driver in last week’s revival in commodities(NYSEARCA:DBC) prices: news of progress in US-China trade talks, which was a factor in boosting crude oil prices – the main component for iShares S&P GSCI Commodity-Indexed Trust (GSG). The fund jumped 2.5% last week, posting its first weekly rise in three weeks.
Foreign equities in developed markets delivered a robust second-place performance. Vanguard FTSE Developed Markets (VEA) rose 2.1% last week, lifting the fund to a level that’s close to a one-year high at the end of Friday’s trading. Emerging markets equities were in third place: Vanguard FTSE Emerging Markets (NYSEARCA:VWO) rose 1.5% on a weekly basis.
The weakest performer last week among the major asset classes: inflation-indexed Treasuries. The iShares TIPS Bond (TIP) fell 1.2%, leaving the ETF near its lowest price for the month so far.
The broad trend for markets generally last week was up, based on an ETF-based version of the Global Market Index (GMI.F). This unmanaged benchmark, which holds all the major asset classes (except cash) in market-value weights, rose 0.5% last week – it’s first weekly gain in a month.
For one-year returns, US real estate investment trusts are still firmly in the lead. Vanguard Real Estate (NYSEARCA:VNQ) has gained 23.3% on a total return basis – comfortably above the one-year results for the rest of the major asset classes.
Despite last week’s rally, broadly defined commodities remain in last place by a wide margin. GSG is down 15.8% for the trailing one-year period as of Friday’s close. By contrast, all the other major asset classes are posting one-year gains.
GMI.F is also up for the trailing 12-month period, posting a solid 7.7% total return.
Profiling the major asset classes through a momentum lens continues to show that bullish trends prevail for most markets. The analysis is based on two sets of moving averages for the ETFs listed above. The first compares the 10-day moving average with its 100-day counterpart — a proxy for short-term trending behavior (red line in chart below). A second set of moving averages (50 and 200 days) represent an intermediate measure of the trend (blue line). Although these benchmarks have been volatile lately, the majority of markets still reflect an upside bias.