Commodity prices have generally risen this week, in large part due to optimism about further economic stimulus in China. We are more cautious as we expect the expansionary impact of stimulus to only feed through into the real economy in the second half of the year. What’s more, it is only likely to stabilise the economy rather than give a marked lift to growth. As such, we remain of the view that most commodity prices will end the year lower.
The focus is likely to remain on China next week as markets look for any detail on the economic stimulus or any indication of the direction of trade talks with the US at the end of the month. Meanwhile, we expect China’s activity and investment data, scheduled for Monday, to confirm the weakness in December, which may act as a lid on commodity prices. That said, December data are not always a useful indicator of actual activity in the month given that they are often the residual needed to tie into annual data.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services