Commodities market remains highly volatile

With high levels of inflation and ongoing geopolitical conflicts persisting, the financial markets continue to experience high levels of volatility.

Consumers may be interested to note that the past week has been a particularly turbulent one for the commodities market.

While wheat rose in value, other commodities including silver and natural gas saw their prices fall. Elsewhere, both Uber and Snapchat delivered strong performances.

Kate Leaman, chief market analyst at AvaTrade notes the reason for the continuing volatility in commodities, “Looking at our most rising table* last week, wheat saw its value rise for the second consecutive week.

“This comes as the world’s largest wheat exporter, Russia, continues experiencing torrential rains and strong winds, preventing suppliers from being able to transport the commodity.

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“What’s more, wheat-producing regions in the southern hemisphere have experienced a lack of rainfall in recent weeks – caused by the El Niño weather phenomenon – exacerbating concerns regarding global wheat supply, and thus ensuring the commodity’s price remains elevated.

“Elsewhere, the value of Uber skyrocketed last week. This followed an announcement by S&P Dow Jones indices’ last weekend that the ride-service company would become part of the S&P 500 index, effective as of 18th December. This news positively impacted investor perception of Uber, causing its share price to surge.

“Once again, Snapchat has seen an uptick in its share price. This comes following a broad-based recovery in digital advertising spending this year, and potentially beyond, as well as positive market sentiment regarding the instant messaging application, which saw the stock upgraded from ‘hold’ to ‘buy’ by a Jefferies analyst.

“On our most falling table last week, silver saw its value plummet. The decline in the commodity’s value was primarily driven by a strengthening dollar, in addition to a rise in Treasury yields. This followed a jobs report which surpassed expectations and showed a tighter labor market, resulting in traders reassessing the probability of cuts to U.S. interest rates.

“What’s more, Natural Gas prices also saw a sizeable drop last week. Despite the fact that more gas is used during the winter months for heating purposes, lukewarm demand and high storage levels are keeping the commodity’s price down.

“Nevertheless, it is important to note that given the ongoing Israel-Hamas war, the price of Natural Gas may begin rising soon. As Israel is a major supplier of liquefied natural gas (LNG) to Europe, the war could lead to a sharp decline in Natural Gas supplies. This potential shortage may be reflected in our rising and falling tables in future weeks.”