subscribe to our newsletter sign up

Trump a boon for Aussie commodities

Coal in hand

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.

Trump a boon for Aussie commodities
nestegg logo
Promoted Content
Recommended by Spike Native Network
Adrian - It's interesting that manager of retirement research at Aegon, Mike Mansfield said ...."“financial literacy must be integrated into educational.......
Linda - I find it outrageous that, as an Australian citizen, a foreign country (USA) should have details of my investments and bank accounts when I have never.......
Anonymous - Deb so why do I as an Australian born taxpaying citizen have to respond to the demands by the US Internal Revenue service? I don't get to vote there,.......
Don - yep just like we have in all societies, in all countries, in all times, have 'educated and fostered greater love and respect by children for their own.......