February was dominated by a massive global equity liquidation sparked by a 9% drop in China’s Shenzhen 300 Index in the final two trading sessions of the month.
The Dow finished 3 % lower as distress in the sub-prime US mortgage markets and bearish comments by former US Fed Chair Greenspan added fuel to the tumbling Chinese stock market triggering a massive flight to fixed income instruments.
A dramatic late month unwinding of the carry trade saw the Yen strengthen while the Euro continued to gain ground against the Dollar amid growing anticipation of a mid to late year rate cut in the US.
Gold and silver remained steady throughout February despite the dollar weakness with plummeting stockpiles adding to the momentum in base metal prices led by nickel.
Corn, cattle and cocoa continued to rise while sugar and coffee lost ground on good rains in Brazil.
Losses in global stock indices
The Superfund trading systems saw negative results in the Dow (-3%) as a late-month sell-off
wiped out three weeks of early gains and the new record high posted on February 20th.
The Dow finished 500 pts lower as speculation on increased US sub-prime mortgage defaults and negative market comment by US Fed Chair Greenspan compounded the dramatic reversal created by the tumbling China stock market.
Euribor futures pushed sharply higher
The Superfund trading systems positions in 3M Euribor futures yielded poor results in February.
Short positions suffered when a late-month flight to safety pushed values sharply higher as a result of the massive global equity sell-out, distress in the sub-prime US mortgage markets and recessionary predictions by Greenspan.
Gains from Gold Futures
The Superfund trading systems were able to profit in February from steady gains in Gold futures (+2.2%) before selling off at the end of the month as players had to square positions to cover equity losses from the Chinese stock market fallout. Political insecurity in the Middle East and the weaker Dollar propelled April Gold to trade above $690 per ounce by February 23rd (+4.8%).