Share

Commodity stocks rise on growth view

Hong Kong - Resources-linked stocks rose and oil climbed towards the $91 per dollar mark for the first time in more than two years after latest US data offered yet another sign that the world's biggest economy is on the mend.

The Asia-ex Japan index for commodity shares as measured by MSCI also rose within sight of a recent 2-1/2 year peak as investors bet that a healing US economy along with the relentless rise of China and India would continue to fuel demand for commodities amid tight supplies.

The S&P/Goldman commodities index , which has a higher weightage of oil and therefore more relevant to Asia due to its huge demand, also flirted with a fresh 26-month peak on Thursday.

The 30-day corelation between the S&P 500 and the same commodities index has been between a high 0.87 and 0.94.

Wednesday's data, which showed the US economy expanded at a slightly higher than expected pace of 2.6% in the third quarter, comes after recent data such as retail sales indicated economic activity has accelerated in the last few months.

That brightening growth view has forced analysts to revise up their projections for the United States and kicked Treasury yields up nearly 100 basis points since the start of November - when the Fed launched its second round of quantitative easing.

"The global economy looks a whole lot happier than it did six months ago. Fears of a double-dip have faded," HSBC economists said in a note while upgrading their 2011 global growth forecasts by nearly half a percentage point to 3.3% led by Asia.

That growing optimism was reflected in latest Reuters polls, which showed investment houses raising their equity holdings, increasing exposure to high-yield credit and cutting back on government debt.

Asia Pacific stocks, as measured by MSCI were largely steady as thin year-end liquidity and a holiday in Japan meant investors were reluctant to do much after having taken some profits recently when Asian stocks hit 2-1/2 year peaks.

But in a grim reminder that the eurozone's debt crisis were far from over, the euro plumbed to a record low versus the Swiss franc overnight, with traders citing some buying interest emerging from players in the region, including central banks.

While the outlook towards the single currency continues to be bearish in 2011, the euro seems sandwiched between good sovereign demand in the high €1.30's and decent selling interest on 100 pip rallies.

In contrast, the Australian dollar was back at parity against the greenback, thanks to optimism about the global economy which has supported commodity prices and global stocks.

Ten-year US Treasuries were a shade weaker with yields rising to 3.35%, on course for its fourth consecutive monthly rise. T-note futures pointed to further rise in yields.

Gold which has been a big beneficiary this year due to the eurozone's debt crisis, was largely steady around $1386 an ounce, just below a historical peak of around $1 430 hit earlier this month.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
19.00
-0.3%
Rand - Pound
24.14
-0.1%
Rand - Euro
20.64
-0.2%
Rand - Aus dollar
12.38
+0.3%
Rand - Yen
0.13
+0.5%
Platinum
910.20
-1.4%
Palladium
1,008.00
-5.4%
Gold
2,157.44
-0.1%
Silver
24.95
-0.4%
Brent Crude
86.89
+1.8%
Top 40
66,252
0.0%
All Share
72,431
0.0%
Resource 10
53,317
0.0%
Industrial 25
100,473
0.0%
Financial 15
16,622
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders