Prices & Review

Overview (April 2024)

Generally strong US economic data have pushed US 10Y treasury yields back up to 4.7%, from 4.2 % at the end of March and 3.9% at the start of the year. In-deed, the market is now only expecting one 25 basis point cut this year. This change in outlook has lifted the US dollar, with the Dollar Index rising to a high of 106.50 in April, having started the month around 104 and being around 101 at the end of 2023. The strength of the dollar and treasury yields has not stopped gold and silver prices from rising rapidly. Despite a strong dollar, most base metals have gained between 15 and 20% during the month of April. This suggests that the improved economic outlook is being seen as bullish for commodities, even where the fundamentals are not necessarily bullish, as for certain metals. Most major western equity markets were at record highs as recently as March, but have since pulled back slightly on the back of the likely delay in the first US rate cut. The huge amounts of investment that the US Inflation Reduction Act (IRA) is bringing on the US economy is a major factor in fueling US growth. While IRA grants and loans may only be going to com-panies directly involved in the green transition, there will be countless companies supporting those that get the investments and the onshoring and deglobalization of supply chains around the world means a significant rise in global Capex. This should be good for corporates and commodities alike.
While China’s property market is still in the doldrums, the latest government initiative of encouraging consumers and businesses to replace old goods and equipment with new, more efficient goods and equipment does seem to be boosting growth. China’s CSI 300 Index has started to rebound it was recently at 3,580, having dropped from 5,800 in February 2021, to 3,180 in Febru-ary 2024.
In the energy sector , oil and coal prices have re-mained relatively stable over the past 6 months , fluctuating in a range between 70 and 85$ a barrel and between 120 and 150 $ per ton of coal.