Commodities Bounce Despite Challenges

The resources sector has outperformed over the past two months despite emerging market struggling - but what does the rest of the year hold?

J.P. Morgan Asset Management 6 March, 2014 | 7:30AM
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This article is part of Morningstar's "Perspectives" series, written by third-party contributors. Here, James Sutton, Client Portfolio Manager, J.P. Morgan Asset Management explains how resources have outperformed despite the emerging markets sell-off.

It has been a volatile start to the year. Developed world equity markets are flat to down. In the emerging markets, fears of a balance of payments crisis in Argentina and Turkey, and weaker-than-expected manufacturing activity in Brazil, Russia, India and China, has pushed the MSCI Emerging Market Index down 5%. More recently, the ousting of Ukrainian President Yanukovych and Russia’s occupation of Crimea have further diminished risk appetite.

And yet the resources sector, a segment of the market normally driven by increasing risk appetite and emerging market optimism, has outperformed. Commodity prices, as represented by the Dow-Jones UBS Commodity Index are up 7%, while the MSCI materials sector is the second best performing sector year to date within global equity markets.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
BHP Group PLC1,996.00 GBX2.83Rating
Freeport-McMoRan Inc39.40 USD4.58
Glencore PLC371.90 GBX1.34Rating
Rio Tinto PLC4,766.50 GBX2.01Rating

About Author

J.P. Morgan Asset Management  is the investment arm of JPMorgan Chase & Co. and it is one of the largest active asset managers in the world.