Maybe the good news is priced in?

All the signs are that US-China trade talks are progressing well. On Friday, there were even media reports that the two sides had agreed timelines for implementing a deal. Given the good news on trade, some more upbeat economic data and the apparent strength in investor risk appetite, it is somewhat surprising that the prices of most industrial metals fell this week. We think the muted reaction perhaps reflects that these positive developments had already been factored in to prices. Turning to next week, confirmation that a US-China is imminent could give a general lift to commodity prices – perhaps with the exception of gold – even if it proves short-lived. Meanwhile, China is set to publish a raft of March data, culminating in the trade numbers on Friday. Commodity imports generally held up well in the first two months of the year so it will be interesting to see if this continued in March given significantly higher oil prices and disruptions to global iron ore production.