Five Key Charts to Watch in Global Commodity Markets This Week
Sunday, Nov 3, 2024 5:22 pm ET
2min read As the global economy continues to evolve, the commodity markets remain a crucial indicator of its health and direction. This week, we highlight five key charts that investors should keep an eye on, providing insights into the current state and potential future trends of various commodity markets.
Copper, a vital metal in the electric vehicle (EV) industry, has seen its price surge by over 40% this year. The increasing demand for copper in EV batteries, coupled with investment in clean energy triggered by Joe Biden's signature climate law, has driven the price increase. Despite recent pullbacks due to concerns about the Chinese economy, the long-term outlook for copper remains bullish, supported by the growing EV industry and global climate policies.
The US has emerged as the leading investor in clean energy, surpassing China in the first half of 2024. According to BloombergNEF, the US invested $22 billion in climate-tech, including electric vehicles, batteries, and clean power. This surge is largely due to effective tax credits and incentives, such as those provided by the Inflation Reduction Act. In contrast, global funding for the sector fell by nearly 50% compared to the same period last year.
The strengthening US dollar, as a global reserve currency, typically puts downward pressure on commodities priced in dollars, including copper. As the dollar appreciates, it makes these commodities more expensive for foreign buyers, potentially reducing demand and thus prices. However, the relationship between the dollar and copper prices is not straightforward, as seen in the chart below. Despite the dollar's recent strength, copper prices have been volatile but largely resilient, indicating that other factors, such as supply constraints and demand from emerging markets, may be influencing the market.
Europe enters its heating season this week with a massive natural gas stockpile to shield itself from unexpected supply outages. The continent's sites are about 94% full – above historic averages, but slightly below last year's levels – enough to keep some traders watchful as they closely monitor continuing storage build-up before the freezing weather spreads.
The utilities sector is outshining other industries on the S&P 500 Index in the last three months. Stocks of US power providers racked up big gains in the third quarter on market giddiness over prospects of surging electricity demand from artificial intelligence-focused data centers. Utilities are on pace to top the 11 industry groups of the S&P Index as the quarter draws to a close, with gains driven by plant operators Vistra Corp. and Constellation Energy Corp., which just inked a power supply deal with Microsoft Corp. Vistra is noteworthy because it's also holding its ranking as the best performing stock in the broader S&P 500 for the year, after shares more than tripled.
In conclusion, these five key charts provide valuable insights into the current state and potential future trends of various commodity markets. As investors, it is crucial to stay informed about these trends and adapt our strategies accordingly. The global economy is dynamic, and the commodity markets reflect this dynamism, offering opportunities for those who can navigate the ever-changing landscape.
Copper, a vital metal in the electric vehicle (EV) industry, has seen its price surge by over 40% this year. The increasing demand for copper in EV batteries, coupled with investment in clean energy triggered by Joe Biden's signature climate law, has driven the price increase. Despite recent pullbacks due to concerns about the Chinese economy, the long-term outlook for copper remains bullish, supported by the growing EV industry and global climate policies.
The US has emerged as the leading investor in clean energy, surpassing China in the first half of 2024. According to BloombergNEF, the US invested $22 billion in climate-tech, including electric vehicles, batteries, and clean power. This surge is largely due to effective tax credits and incentives, such as those provided by the Inflation Reduction Act. In contrast, global funding for the sector fell by nearly 50% compared to the same period last year.
The strengthening US dollar, as a global reserve currency, typically puts downward pressure on commodities priced in dollars, including copper. As the dollar appreciates, it makes these commodities more expensive for foreign buyers, potentially reducing demand and thus prices. However, the relationship between the dollar and copper prices is not straightforward, as seen in the chart below. Despite the dollar's recent strength, copper prices have been volatile but largely resilient, indicating that other factors, such as supply constraints and demand from emerging markets, may be influencing the market.
Europe enters its heating season this week with a massive natural gas stockpile to shield itself from unexpected supply outages. The continent's sites are about 94% full – above historic averages, but slightly below last year's levels – enough to keep some traders watchful as they closely monitor continuing storage build-up before the freezing weather spreads.
The utilities sector is outshining other industries on the S&P 500 Index in the last three months. Stocks of US power providers racked up big gains in the third quarter on market giddiness over prospects of surging electricity demand from artificial intelligence-focused data centers. Utilities are on pace to top the 11 industry groups of the S&P Index as the quarter draws to a close, with gains driven by plant operators Vistra Corp. and Constellation Energy Corp., which just inked a power supply deal with Microsoft Corp. Vistra is noteworthy because it's also holding its ranking as the best performing stock in the broader S&P 500 for the year, after shares more than tripled.
In conclusion, these five key charts provide valuable insights into the current state and potential future trends of various commodity markets. As investors, it is crucial to stay informed about these trends and adapt our strategies accordingly. The global economy is dynamic, and the commodity markets reflect this dynamism, offering opportunities for those who can navigate the ever-changing landscape.
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