Market Update: Commodities

Developed market equities have had a shaky six months - with geopolitical threats creating volatility. But the natural resources sector has done surprisingly well

J.P. Morgan Asset Management 22 August, 2014 | 9:32AM
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Morningstar's "Perspectives" series features investment insights from third-party contributors. Here, James Sutton, Client Portfolio Manager, JPM Natural Resources Fund discusses the natural resources sector.

It’s been a rocky summer for global equity markets with escalating geopolitical risk, concerns over sanctions on Russia destabilising the world economy, the Argentina debt default and weak European inflation data all significantly affected investor sentiment.  Against that backdrop, it is interesting to note that the natural resources sector has actually strongly outperformed global equities.

Base metals prices for example have moved higher across the board driven by positive macroeconomic data points from China and further signs that their economy continues to stabilise. It has been a positive for commodities that China sentiment is improving on the back of the government’s continued reform measures.  In particular, relaxation of restrictions in the China property market has eased pressure on the iron ore price.  Platinum and palladium prices have also fared much better in recent weeks as those markets have remained tight.

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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.