Daily Spotlight

Improving Outlook for Commodity Prices

After a strong recovery in 2016-2017, commodity prices have trended lower in recent quarters as a brewing trade war between the U.S. and its trading partners has increased the risk of a global economic slowdown. The commodities market bottomed in January 2016, when oil prices were below $30 per barrel and copper was below $4,500 per metric ton, according to the World Bank. Since then, oil prices had climbed 135% and copper prices more than 50%. But trends reversed course in 2018, led by soybeans, copper and gold. We forecast stable prices for commodities in 2019 as the Brazilian economy recovers and China continues to grow. Still, it appears as though trade and tariff talks will continue through the first half of the year at least, adding volatility. As a consequence, we recently lowered our sector recommendation to the Basic Materials group to Market-Weight. The current market weighting of the sector is 3.0%, and we think investors should consider exposure of 2%-4% in diversified portfolios. We recommend well-managed, financially strong industry leaders that are able to take market share during challenging periods. ...  the first half of the year at least, adding volatility. As a consequence, we recently lowered our sector recommendation to the Basic Materials group to Market-Weight. The current market weighting of the sector is 3.0%, and we think investors should consider exposure of 2%-4% in diversified portfolios. We recommend well-managed, financially strong industry leaders that are able to take market share during challenging periods.    more

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