Commodities

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Commodities

Commodity Market Returns              Q3           LTM

Bloomberg Commodity Index              -2.0%       2.5%

Bloomberg Agriculture Index               -5.5%     -12.7%

Bloomberg Brent Crude (N.Sea)           5.8%       55.1%

Bloomberg West Texas Int. oil (US)     3.3%        47.6%

Bloomberg Gold Index                         -5.0%      -7.7%

S&P GSCI Industrial Metals Index       -6.5%       -3.7%

Summary

  • Commodities post negative return in Q3
  • Metals collapse as trade tensions escalate
  • Oil rallies as US/Iran & US/Saudi rensions rise
  • Gold falls as USD advances

Commodities posted a negative return against higher US dollar and trade uncertainties. The Bloomberg Commodities index posted a -2.0% return in Q3 with commodities linked to growth and global trade, such as industrial metals agriculture suffering the most over the quarter. Notably, Iron ore and Zinc prices have rallied in recent weeks, supported by growing speculation of further stimulus measures from Chinese government. Most commodities particularly, industrial metals, could see sharp price appreciation should China engage in a major economic stimulus plan.

Crude oil prices continued to rally, despite OPEC announcing plans to boost supply and shale rig count in the US increasing. Prices rose amid supply concerns linked to the re-imposition of US sanctions on Iran, the first phase of which took place during the month. US/ Iran and US/ Saudi tensions have flared leadig to fears about oil embargos.

Surprisingly, amidst the political uncertainty, the safe haven of gold responded negatively declining -5.0% as US Dollar rallied. However, notably, gold has found support at the beginning of the fourth quarter as both equity and bond markets sold-off.

“It’s not your salary that makes you rich, it’s your spending habits.” –Charles Jaffe