Pakistan Commodities_Quick to celebrate the end of COVID-19, (AKD Daily, Dec 08, 2020)
AKD Daily
Pakistan Commodities: Quick to celebrate the end of COVID-19
- Investors strengthened bullish outlooks following robust COVID-19 vaccines efficacy data, reduced global political uncertainty fueling expectations of continued stimulus in developed markets and Asian economies resuming industrial production activity driving the TRJ commodity index higher by 10.6%MoM.
- The pace of industrial growth broadly hastened Nov’20, as highlighted by both global and economy specific PMIs for manufacturing climbing higher into expansionary territory, where China, Brazil, India were notable. US consumer spending and services PMI accelerated as well.
- Energy commodities witnessed strong uptick in price levels where a strong reversal in demand fundamentals led coal prices higher and crude benchmarks climbed on continued OPEC+ compliant production arrangement, despite moderate rise in agree upon targets.
- Overall, vaccine fueled optimism drove a rally in major commodity classes, where soft commodities climbed from risks brought on by natural concerns, leading FAO’s Vegetable Oil Sub index to climb back to early 2014 highs.
- Continuing optimism on the vaccine front coupled with debt driven stimulus in the US (driving weakness in US$), manifests into higher commodity benchmarks (particularly major contracts quoted in US$). On the back of this trend and from a top-down perspective, a spell of weak external metrics may deplete market sentiments over the near term. On the flipside, pricing power exhibited by commodity linked stocks should provide relief for corporate profitability in these sectors.
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