After a strong first quarter, we expect the prices of most commodities to ease back over the course of 2019 on the back of subdued growth in demand. There are now broad-based signs of slower growth in most major economies, including the US, the euro-zone, Japan and China. Admittedly, there are supply concerns in a number of large commodity markets, including oil, copper and iron ore, but for now we are confident that supply will be sufficient to meet our downbeat demand projections.
Indeed, there could be more bad news on global economic trends next week with the release of a raft of data including China’s official and unofficial March PMIs (Sunday & Monday), the February ISM report in the US (Monday) and German February industrial production (Friday). However, the negative implications of weak activity data for commodity prices may be more than offset by any further progress in the ongoing US-China trade talks. That said, we feel markets have largely priced in some sort of deal.
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