Commodities primed for major week ahead
LONDON: Commodities investors will zero in this week on the tide of moves around the globe to ease the anti-virus lockdowns that have crippled economies. Raw materials may get a lift as the shackles are loosened from the United Kingdom and the United States to Australia, Germany and India. Among gainers on Monday, copper surged in London after a holiday-lengthened weekend.
In energy, there’ll be earnings from behemoth Saudi Aramco, as well as monthly market snapshots from Opec and the International Energy Agency (IEA). Metals investors get insights from Alcoa Corp and Rio Tinto Group as top miners present at a Bank of America Corp conference. Significantly, the event is virtual, offering a template for gatherings in the post-pandemic era.
Crop investors can dissect the fine print of the USDA’S influential monthly World Agricultural Supply and Demand Estimates report on Tuesday. China is in focus, too, with industrial production data set to yield clues on the state of demand, as Asia’s top economy moves past the virus-driven dislocation.
Rounding out the picture, 13F filings for the first quarter are due for release by the end of the week. The disclosures from money managers and hedge funds that oversee more than Us$100mil cover Us-traded stocks, options and convertible bonds. Positions in energy and gold will be of particular interest.
Saudi Aramco reports earnings Tuesday at an intriguing moment. Saudi Arabia’s government just announced a slew of harsh austerity measures to cope with the pandemic and oil rout. At the same time, there’s speculation Aramco itself may seek to rejig its payment schedule for the acquisition of petrochemical giant Saudi Basic Industries Corp. When the results come, investors also want to know if the world’s biggest company stands by a pledge to pay Us$75bil to shareholders even after majors including Royal Dutch Shell Plc cut dividends.
In addition to insights from Aramco, Opec and the IEA release monthly reports Wednesday and Thursday, which will be scrutinised for shifts in supply and demand. Last week, Saudi Arabia moved to prop up a nascent recovery by raising prices for customers. On Monday, oil traded lower as investors weighed signs of a recovery in demand against the huge global glut.
On-the-ground conditions in China go a huge way toward setting the overall mood and direction in global commodity markets, and this week’s industrial production data will offer key intelligence on the state of raw materials demand, as the coronavirus outbreak moves into the rear-view mirror. A positive reading on-month is expected in the Friday release.
At the weekend, the People’s Bank of China said while the country faces unprecedented economic challenges, it will resort to “more powerful” policies to counter the hit to growth. Improved data would further support appetite for risk, and bellwether copper may garner particular attention. Since a March low it’s up 14% in London, and it may push closer to a bull market this week.