Commodities

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Commodities

Commodity Market Returns               Q1           LTM

Bloomberg Commodity Index                6.3%       - 5.2%

Bloomberg Agriculture Index               - 3.2%       - 16.3%

Bloomberg Brent Crude (N.Sea)           25.2%       1.1%

Bloomberg West Texas Int. oil (US)      30.2%     - 4.9%

Bloomberg Gold Index                           0.9%      - 2.8%

S&P GSCI Industrial Metals Index         8.6%      - 4.1%

Summary

  • Commodities rally on Chinese demand
  • Industrial Metals bounce on Chinese growth
  • Oil jumps sharply, as supply restricted
  • Gold returns muted, as investors turn bullish

Commodities rally in Q1 as markets price in greater Chinese demand. Commodities asset class posted solid gains over the quarter with four of the six major sub-sectors posting gains and only two posting losses. In Q1, energy led the commodities asset class with a 19.5% gain. Industrial Metals followed with gains of 8.6% on the prospect of higher Chinese growth. Markets priced in greater demand for industrial metals heavily used in Chinese construction, property and hard industry. Agriculture was the worst performing sub sector driven by adverse weather in South America and Trump tariffs impacting grain, corn and soybean prices. 

Oil price rebounded in Q1. In March the price of oil closed above $60 a barrel for the first time since early November, capping its best quarter since 2009. Russia, Saudi Arabia and other top exporters have squeezed production in response to a growing oversupply, while sanctions against Venezuela and investor pressure on US shale drillers have all restricted supply, supporting oil prices.

Gold rise muted as investors turn bullish. Gold a strong barometer for fear and uncertainty, struggled over the quarter relative to the wider commodity market as investor risk appetite returned. Investors favoured pro-cyclical commodities and ignored gold, a popular defensive asset. The yellow metal closed the quarter at just above $1290. The US dollar index also moved higher limiting gold returns.

 

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