Commodities turn and equities rally
The two big stories dominating the news last week were the upturn in global stock markets; and the rally in commodities prices.
Oversupply issues have plagued commodity markets of late but a bunch of recent events suggest the tide may be turning.
The rally in prices that we saw last week came off the back of geo-political events in Syria. Whilst we caution that the path ahead for commodities may not be smooth; we do believe the turn is near, if not already underway.
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Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
Published on 13 Oct 15
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The two big stories dominating the news last week were the upturn in global stock markets; and the rally in commodities prices.
Oversupply issues have plagued commodity markets of late but a bunch of recent events suggest the tide may be turning.
The rally in prices that we saw last week came off the back of geo-political events in Syria. Whilst we caution that the path ahead for commodities may not be smooth; we do believe the turn is near, if not already underway.Sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
-
Venezuela tension heats up
Duration 03:16
-
Aussie dollar surprises market
Duration 03:10
-
Markets climb as investors watch US healthcare bill
Duration 02:31
Oversupply issues have plagued commodity markets of late but a bunch of recent events suggest the tide may be turning.
The rally in prices that we saw last week came off the back of geo-political events in Syria. Whilst we caution that the path ahead for commodities may not be smooth; we do believe the turn is near, if not already underway. Here’s why:
Firstly, sentiment towards commodities had become overly pessimistic and may now have bottomed.
Secondly, there is growing evidence that sharp falls in commodity prices have prompted the supply cuts needed for a sustained recovery. Whilst Glencore has dominated the headlines recently, it is not alone in pulling back in the mining sector.
Thirdly, when it comes to the demand side of the equation, worries about a "hard landing" in China are beginning to fade.
The market also seems to be coming around to the belief that Chinese data should improve over the remainder of the year as more policy stimulus kicks in.
Good news from China should help to counter the negativity coming out of the US where confidence in the US Federal Reserve is waning.
In Australia, we expect low energy prices to have washed out of inflation numbers by January 2016 – which will make it harder for the RBA to hike rates.
The weaker Aussie Dollar will also add to the risk of inflation. If the dollar doesn't get down to 65c by December, then it probably won’t get there at all, as expectations of a rate cut will diminish as inflation ticks up and China growth starts kicking in.