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General Market Commentary
Goldman Backs Commodities as Trade War Fury Now Met With Shrugs
Commodity bull Goldman Sachs Group Inc. says raw materials are poised to gain into the end of the year as investors have now become used to trade-war tensions, growth in top economies remains strong, and consumers who’d put off purchases in recent months start buying again. Copper jumped.
“This week the trade war was escalated and markets shrugged it off with copper rallying,” analysts including Jeffrey Currie said in a note received on Friday and dated Sept. 20. “The reason is the market has already factored in an extended standoff between the U.S. and China.”
Raw materials are heading for the biggest weekly jump since April, aided by gains in metals including copper as well as crude, with Brent nearing $80 a barrel amid concern about dwindling supplies from Iran and Venezuela. The climb comes even as the U.S. pledges more tariffs on $200 billion of goods from China, which kick in on Monday, and Beijing has vowed to retaliate. As those deadlines loom, equity investors propelled Wall Street benchmarks to records on Thursday, including a high for the Dow Jones Industrial Average.
“Growth in the Big Four has not slowed materially,” Goldman said, referring to the U.S., EU, China and India. “Both hard and soft macroeconomic data do not show a material slowdown in Chinese growth.” The bank added that the pace of expansion in the U.S. is “stronger than expected.”
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