Natural gas and UNG
Between September 29 and October 6, 2017, the United States Natural Gas Fund ETF (UNG) fell 4.9%, while natural gas (BOIL) (GASX) November futures fell 4.8%. UNG track natural gas near-month futures contracts. In the past five trading sessions, UNG fell slightly more than natural gas futures.
Natural gas active futures
On March 3, 2016, natural gas active futures closed at their 17-year low. Since that time, natural gas prices have recovered 74.7%. However, UNG rose 7.9% during this period. The negative roll yield could be behind the underperformance of UNG.
If the active futures contract expiry is within two weeks, UNG shifts its holdings in active natural gas (FCG)(GASL)(GASX) futures to the following month’s futures contract. As a result, the fund could incur losses if the next month’s futures are priced at higher levels compared to the expiring futures when it shifts its holdings. In this case, the roll yield would be negative.
On October 6, 2017, natural gas futures contracts out to February 2018 settled at progressively higher prices.
In the final part of this series, we’ll discuss the key energy events this week.
Kellogg (K) announced the acquisition of Chicago Bar Company, the manufacturer of RXBAR, for $600 million.
Broadcom (AVGO) stock fell ~8.5% after markets closed yesterday following the semiconductor giant's fiscal 2019 second-quarter earnings release. It missed analysts' revenue estimate and cut its fiscal 2019 revenue guidance by $2 billion to $22.5 billion due to sluggishness in its semiconductor solutions business.
The SPDR Gold Shares ETF (GLD), which tracks physical gold prices, has underperformed the broader markets year-to-date, rising just 4.4% compared to the S&P 500’s (SPY) gain of 15.9% as of June 14. The sentiment for gold, however, has been turning around.
Safe havens such as Treasuries and gold were back in favor on June 14 as stocks fell due to rising tensions in the Middle East, concerns over growth, and the looming threat of the US-China trade war. The tech-heavy Nasdaq Composite Index fell 0.67% in the first hour of trading.
Lululemon (LULU) stock rose 2.1% on June 13 in reaction to better-than-expected first-quarter results and an upgraded outlook for fiscal 2019 overall. The company's first-quarter adjusted EPS grew 34.5% to $0.74 on revenue growth of 20.4% to $782.32 million. Analysts had expected EPS of $0.70 and revenue of $755.31 million. Here's why the outlook got an upgrade.
As of 4:40 AM Eastern Time today, US crude oil active futures were at $51.83, ~4% below their closing level in the previous week. If US crude oil prices stay at those levels today, they'll mark their third week of decline in five weeks.
Amazon is discontinuing its Amazon Restaurants service, which has been delivering food for restaurants in parts of the United States. Amazon Restaurants launched in the United States in 2015 and entered the British market the following year. However, it met strong opposition in the British market.