Global equity markets trended higher in September, after the U.S. central bank lowered the interest rate by 50 base points thus renewing confidence in the world’s largest economy. The Dow Jones index reached all-time highs at the end of the month. World bond markets rallied early amid fears of a global recession. However the aggressive U.S. interest policy allayed concerns, resulting in considerable reductions in the bond markets. The Dollar dropped to a new record low against the Euro and other currencies such as the Australian Dollar. Commodity prices rose by the largest amount in 32 years as the Dollar continued to weaken.
Positive returns from the Euro and Soybeans
Superfund trading systems experienced gains on positions in the Euro, as the European currency advanced 4.6% to an all-time high against the Dollar. Despite disappointing German financial data, the ECB maintained its monetary policy. The Euro/ Dollar closed over the 1.40 mark mid month following a surprisingly low cut in interest rates by the U.S. central bank. Further rate cuts are expected in the USA, while the ECB remains focussed on the fight against inflation.
Superfund trading systems also gained profits from positions in soybeans, as the market rose by 12.3% in September. The U.S. Ministry of Agriculture reduced their production estimate for the 2007/08 U.S. crop. Nevertheless, continued strong demand has resulted in lower warehouse stock estimates for both the 2006/07 and 2007/08 crop years. There are currently 96 additional bio-fuel factories under construction in the U.S.A. The revised forecast for 2007/08 bio-fuel consumption has increased from 2.5 billion pounds up to 4 billion pounds.
Mixed results on sugar
In September, Superfund trading systems saw mixed returns on positions in sugar. The news that Indian sugar production may rise around 8.3% next year to a record high of 33.1 million tons caused a slight drop in sugar futures by mid month. With a potential export surplus of 4 million tons, India is on course to replace Brazil as the world’s largest producer of sugar. By the end of the month, sugar recovered as the U.S. Dollar fell sharply and energy prices rose by 3.4%. The news that Russia plans to increase the tax on sugar exports by 57% gave additional support to the market value.