The major index exchange traded funds (ETFs) were flat at the open on Tuesday as a move higher in the dollar pressured commodities and traders took some profits.
- Precious metals prices fell on Tuesday, led lower by a nearly 5% slide in silver, after the main U.S. metals exchange announced higher margin requirements, the third such hike in a little more than a week. The enlarged margins mean investors have to put up larger sums to hold speculative positions in the gray metal and has likely forced small investors to liquidate positions, analysts said. One analyst said the move was “highly unusual” and that silver prices would likely come under pressure, at least in the short term. Also, “silver has been pulled between weak underlying fundamentals and strong retail investment demand, with investor demand residing in the driving seat,” said analysts at Barclays Capital. Other factors weighing on gold and silver included the death of Osama bin Laden, which was seen as reducing geopolitical anxieties and triggered selling in the less-risky asset classes of precious metals. The ProShares UltraShort Silver ETF (NYSEArca: ZSL) jumped 3.5% early Tuesday.
- The U.S. dollar rose Tuesday, posting particularly sharp gains against the British pound after U.K. economic data indicated a further slowdown in manufacturing expansion. The Euro recovered from an earlier decline as traders look toward Thursday’s monetary-policy decision from the European Central Bank. The dollar index, which measures the performance of the greenback against a basket of six currencies, stood at 73.120, up from 73.053 in late North American trading Monday. Currency strategists at Brown Brothers Harriman expect the greenback to lose ground in coming days. “Policy differences between the [Federal Reserve] and other central banks, and the resulting interest-rate differentials, have been a large factor in dollar weakness,” they said. The PowerShares DB Dollar U.S. Bullish Index ETF (NYSEArca: UUP) rose fractionally.
- New orders received by U.S. factories climbed robustly in March, posting a fifth straight monthly gain that pointed to a healthy manufacturing sector that is supporting a continuing recovery, government data on Tuesday showed. The Commerce Department said new orders for manufactured goods rose 3 percent to a seasonally adjusted $463 billion, well above Wall Street economists’ forecasts for a 1.9 percent pickup. February orders previously reported as having fallen by 0.1 percent were sharply revised to instead show a 0.7 percent increase. Excluding volatile transportation goods, March orders were up 2.6 percent following a 0.6 percent February rise — an eighth straight gain in this key orders category. Orders for primary metals, machinery and electrical equipment all were higher in March though orders fell for fabricated metal products and computers.The Industrial Select Sector SPDR (NYSEArca: XLI) is flat early Tuesday.
Gregory A. Clay contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.