In commodities markets, China will trump Trump
Even if Donald Trump can deliver the massive stimulus package he promised, this alone cannot justify the extreme optimism being priced in, writes Clyde Russell
Launceston — The election of Donald Trump as US president has added froth to prices for metals and bulk commodities, but the real driver is, and will remain, the outlook for China. While price volatility associated with the somewhat surprising election of the brash real estate mogul was always likely, hopes for a Trump-led revival of industrial commodities and coal look way too optimistic. Even if Trump can deliver a massive stimulus package as promised when he takes occupancy of the Oval Office in January, this alone would unlikely be enough to justify some of the extreme optimism now being priced into commodities. The market also seems to be ignoring the threat to commodities posed by Trump’s stated trade protectionism, with the possibility of higher tariffs on Chinese goods probably a greater downside risk than the upside potential of a Trump stimulus programme. Is the outlook for copper now so strong that it deserved to enjoy its best week since 2011? The London benchmark reache...
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