Invest
Trump a boon for Aussie commodities
Despite uncertainty around the ramifications of a Trump presidency, it appears Australian commodities could emerge the real winner from the US election.
Trump a boon for Aussie commodities
Despite uncertainty around the ramifications of a Trump presidency, it appears Australian commodities could emerge the real winner from the US election.
While details of his exact policies remain unknown, Donald Trump’s largely touted infrastructure spending would likely support commodities, particularly in Australia, according to HSBC chief economist Paul Bloxham.
“A Trump presidency looks likely to mean the Americans will be spending more on infrastructure which could very well lead to hard commodity demand and support for commodity prices,” Mr Bloxham told nestegg.com.au.
“Of course though, there’s considerable uncertainty of how much of what’s proposed will actually become policy. That makes it even trickier to figure out what the implications of Donald Trump being president will be for the US economy and more broadly the global economy.”
Australian resource investment manager Terra Capital said that despite ambiguity surrounding policy detail, investor confidence in commodities is already starting to show, with copper rallying to a 15-month high last week.
“While the exact pathway to resources’ return to favour is unclear, our view is that the upwelling in some commodities was a relief rally and that is likely to continue and broaden into a wider recovery for commodities generally,” Terra Capital portfolio manager Matthew Langsford said.
“This change is visible particularly in base metals, with gains posted in copper, nickel, aluminium, zinc, lead, and nickel over the last week,” he added.
Improved investor confidence seemed to also be reflected in the price of gold, as it began to weaken after experiencing strong investment in the weeks leading up to the election.
“Gold was weaker on the back of a broadly stronger US dollar, with spot falling 4 per cent to US$1,272/oz. Gold traded up sharply on Wednesday (pre-election result), trading above US$1,330/oz before giving up most of its gains, as a victory speech from US president-elect Donald Trump helped the dollar rebound,” Mr Langsford said.
“The repercussions of the US election result are supportive of an improving demand outlook for commodities, given infrastructure spending, potential tax cuts, rising inflation, etc.”
However, despite a predicted boom for commodities, the forecast is unlikely to improve for Australian mining states.
RELATED ARTICLES
Commodity
Is crypto getting the shaft for a big gold re-polish?
While the spotlight shines on trendy cryptocurrencies, investors evidently haven’t lost interest in traditional and tangible commodities like precious metals. Read more
Commodity
Morrison’s gas-led recovery sees manufacturers ‘held to ransom’ by gas cartel
Australia’s manufacturing sector and its workers are being ‘held to ransom’ by the gas cartel, despite the Morrison government promising cheap gas as a key policy in the COVID-19 recovery planRead more
Commodity
‘Investors should take note’: Gas-led recovery to lead to stranded assets
Australia’s gas-led economic recovery could be relying on inaccurate financial assumptions, new research has revealed. Read more
Commodity
Credibility up in flames as government opens 21 new gas and oil exploration sites
Climate groups are saying the Morrison government lacks any credibility when it comes to climate change after it announced 21 new gas and oil exploration areas. Read more
Commodity
Morrison urged to drop gas-led recovery after new global warning
The International Energy Agency has found that countries like Australia need to transition their energy grid within 14 years to reach net zero, defying Prime Minister Scott Morrison’s gas-led economic ...Read more
Commodity
Taxpayers to bear brunt of Morrison’s $2bn pledge to oil refineries
Taxpayers are set to be on the hook for up to $2 billion over the next decade as the government commits to protecting two oil refineries. Read more
Commodity
Government unveils $1bn energy deal
The Morrison government has announced a $1.1 billion energy and emissions agreement between the federal and South Australian state government. Read more
Commodity
Australia can get rid of coal without prices skyrocketing
Australia’s transition to renewable energy is unlikely to create unaffordable electricity prices or come at the risk to reliability, with policymakers urged to generate the majority of power from ...Read more
Commodity
Is crypto getting the shaft for a big gold re-polish?
While the spotlight shines on trendy cryptocurrencies, investors evidently haven’t lost interest in traditional and tangible commodities like precious metals. Read more
Commodity
Morrison’s gas-led recovery sees manufacturers ‘held to ransom’ by gas cartel
Australia’s manufacturing sector and its workers are being ‘held to ransom’ by the gas cartel, despite the Morrison government promising cheap gas as a key policy in the COVID-19 recovery planRead more
Commodity
‘Investors should take note’: Gas-led recovery to lead to stranded assets
Australia’s gas-led economic recovery could be relying on inaccurate financial assumptions, new research has revealed. Read more
Commodity
Credibility up in flames as government opens 21 new gas and oil exploration sites
Climate groups are saying the Morrison government lacks any credibility when it comes to climate change after it announced 21 new gas and oil exploration areas. Read more
Commodity
Morrison urged to drop gas-led recovery after new global warning
The International Energy Agency has found that countries like Australia need to transition their energy grid within 14 years to reach net zero, defying Prime Minister Scott Morrison’s gas-led economic ...Read more
Commodity
Taxpayers to bear brunt of Morrison’s $2bn pledge to oil refineries
Taxpayers are set to be on the hook for up to $2 billion over the next decade as the government commits to protecting two oil refineries. Read more
Commodity
Government unveils $1bn energy deal
The Morrison government has announced a $1.1 billion energy and emissions agreement between the federal and South Australian state government. Read more
Commodity
Australia can get rid of coal without prices skyrocketing
Australia’s transition to renewable energy is unlikely to create unaffordable electricity prices or come at the risk to reliability, with policymakers urged to generate the majority of power from ...Read more
