The situation on the international financial markets relaxed somewhat during the month of August, although the markets remained quite volatile right up to the end. Above all, the easing of energy prices had a positive effect across the globe. The ceasefire in Lebanon also helped restore some calm to the markets.
Superfund’s trading systems were able to take profits in the past few weeks, especially from long positions in equities. The U.S. stock market responded favorably to the Federal Reserve’s decision to leave the fed funds rate at 5 ¼ % for the time being. Our position in the Canadian S&P/TSX 60 Index yielded healthy gains, following its 1.6% advance during August. The September futures contract in this index got a boost from the moderate U.S. inflation prognosis and continued its upward trend. Solid signs of economic growth in Europe and Japan also helped to support rising markets.
Our short positions in soybean futures profited from the continuing downward trend in this market. Moderate temperatures and widespread rainfall portend an abundant harvest. The November soybean contract dropped 7.3% in the course of last month.
The international bond markets, in contrast, saw surprising gains. U.S. 30-year Treasuries and German Bunds reached new five-month highs. Weak figures on consumer prices ignited a rally in the Japanese 10-year bond. Our position in the Australian 10-year bond brought us losses in August, as volatility in the markets culminated in a strong month-end rally.
Our trading system was more successful in the currency markets. Although the U.S. Dollar didn’t see much movement against the Euro, the Bank of England’s surprise rate announcement at the start of the month led to a 1.9% gain in the British Pound against the Dollar. The Yen lost ground against both the U.S. Dollar and the Euro as weaker economic data made a further rate hike this year look ever more unlikely. The Canadian and New Zealand Dollars posted gains, as did Latin American currencies.