2024-04-12 23:55:44
Rising global commodity prices show investors are betting on continued economic growth and likely higher inflation.
As Day.Az reports with reference to Interfax, The Wall Street Journal writes about this.
The S&P GSCI commodities index has risen 12% since the start of 2024, while the S&P 500 stock index has gained 9.1%. The increase in copper and oil prices is more than 10% and 17%, respectively. Gold has risen in price by 13% this year, breaking a record.
The rally is driven by expectations that economic recovery will support commodity demand in the US and China, economists say. Data on the growth of industrial activity in the United States and China, published last week, provoked a new wave of purchases of raw materials.
Many experts expect that the current trend may continue for some time. Rising real incomes have contributed to renewed global growth in demand for consumer goods, and this is likely to lead to further increases in commodity prices, Macquarie Group’s team of commodity experts said.
This situation could complicate the Federal Reserve’s task of fighting inflation, writes WSJ.
“The situation in the commodities sector could potentially be a factor that prevents the Fed from cutting rates,” said Bank of America commodities and derivatives analyst Francisco Blanche.
Current oil market dynamics show how rising global demand is supporting a recovery driven by other factors.
The price of Brent remains above the $90 per barrel mark, which it exceeded last week amid the conflict in the Middle East and drone attacks on Russian refineries. An additional factor supporting oil prices is the improvement in the global economic outlook and demand forecasts. In particular, the International Energy Agency (IEA) has raised its forecast for increased demand for the current year.
Similar trends are driving up prices for copper, a metal that is a popular barometer of the economy because it is used in the construction sector and electronics manufacturing, the WSJ notes.
Copper futures have risen more than 16% over the past two months to $4.28 per pound, their highest since June 2022.
Demand from China, which accounts for more than half of global demand, is 12% higher this year than a year earlier, according to Goldman Sachs.
Subscribe to our WhatsApp channel and stay up to date with the main news!