Short week on the markets: oil below 90 dollars, gold heading towards 4,400, Seoul races ahead

This piece does not update this morning’s article on the dollar-yen exchange rate: it concerns a different matter, the weekly close of stock markets and commodities in the mid-August holiday week.

The picture must be read with the caution that the volumes demand. With trading thinned out by the holidays, index changes carry less statistical significance than usual: a 0.2% move in a mid-August session weighs less than the same move in September. This is the case with Piazza Affari, which on Friday 14 August closed down 0.2% after five low-intensity sessions (FIRSTonline; Il Sole 24 Ore - Radiocor).

Beneath the flat surface of the indices, however, three movements have a recognizable direction.

The first is crude oil. Brent has climbed back to the 87-88 dollar per barrel range, supported by uncertainty over the Strait of Hormuz, the passage through which a significant share of oil transits by sea. The price nonetheless remains below the 90-dollar threshold: the market is pricing in a risk premium, not a disruption of flows. What the exact size of that premium is cannot be derived from the available sources, and should instead be said to be an eyeball estimate.

The second is in precious metals. Gold has moved back close to 4,400 dollars an ounce and silver has returned to touch 65 dollars. The movement is consistent with that of oil: both respond to the same geopolitical uncertainty factor, and when the two move together the more economical explanation is that there is a single cause, not two separate demands.

The third, and the most pronounced, comes from Asia. The Korean Kospi index gained over 11% in a week, driven by semiconductors: SK Hynix alone posted a 15% advance. A double-digit weekly increase on a national index is rare and concentrated: it does not describe the health of the Korean economy as a whole, but rather the reallocation towards a specific sector. It is also a reminder that the center of gravity of stock movements, this week, was not in Europe.

In Milan the positive contribution came from defense and shipbuilding stocks: Fincantieri gained 3.2%, Leonardo 1%, in a context in which the US memorandum on shipbuilding also weighed in. Here too the correct reading is sectoral: a sector that rises while the general index falls tells a story of rotation, not a market trend.

In the United States, Friday’s session closed below parity on all three main indices: according to Reuters, the Dow Jones fell 0.16%, the S&P 500 0.14%, the Nasdaq 0.34% (MarketScreener Italia).

The data point that matters for the coming sessions is the combination of a supported Brent and precious metals near recent highs: two prices that are formed on markets open even when stock exchanges are half-empty, and which will therefore arrive at the return of full volumes with a story already written.

Sources: FIRSTonline (closing data and editorial analysis); Il Sole 24 Ore - Radiocor (Radiocor agency); MarketScreener Italia (Reuters agency). Three independent origins.