Does the Recent Fall in Commodity Prices Signals a Buying Opportunity?

Commodity prices have slipped over the past six months, but analysts believe that in metals at least there is positive momentum going forward

Karen Kwok 29 June, 2017 | 3:10PM

The recent fall in commodity prices might represent a buying opportunity, according to analysts. They point out that global economic growth should support demand for commodities – at least for metals - which should encourage more a more positive price momentum.

Over the past six months, commodity prices have fallen by 5.8%, while industrial metals are down 4.4%, according to data from ETF Securities.

Falling prices have had an impact on the energy sector as a whole, which is down 19.5% over this period. The share prices of mining stocks BHP Billiton (BLT) and Anglo American (AAL) are both down more than 9% year to date, while Rio Tinto (RIO) and Glencore (GLEN) are trading at similar levels after six months.  Besides BHP Billiton - that has is trading on its fair value estimate -  equity analysts from Morningstar say the other three stocks are trading above their shares’ fair value estimates.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Anglo American PLC2,088.00 GBP0.00
BHP Group PLC1,691.60 GBP0.00
Glencore PLC232.00 GBP0.00
JPM Natural Resources C Net Acc6.37 GBP1.19
Rio Tinto PLC4,201.50 GBP0.00
T. Rowe Price Glbl Natrl Res Eq A USD7.64 USD1.34

About Author

Karen Kwok

Karen Kwok  is a Reporter for Morningstar.co.uk

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