Commodities Recover From Jolt as Markets Assess Trump Win

November 10, 2016 04:26 AM
Commodities Recover From Jolt as Markets Assess Trump Win

Raw materials and shares of the companies producing them were whipsawed as investors wrestled with the implications of Donald Trump’s stunning victory in the U.S. presidential election.

Oil reversed a slide to end higher, while gold was little changed after an early jump on haven demand. Industrial metals fell and then soared, pulling mining shares with them as investors bet governments would fend off weaker growth with infrastructure spending.

“Trump has talked about getting America back to work and that means big military and infrastructure spending, which is good for commodities,” said Rene Hochreiter, a Noah Capital Markets Pty Ltd. analyst in Johannesburg.

Copper for three-month delivery touched a 15-month high before closing 3.4 percent higher at $5,413 a metric ton on the London Metal Exchange. Mining stocks benefited. Antofagasta Plc jumped 8.9 percent and Glencore Plc 6.8 percent. Freeport-McMoRan Inc., the biggest publicly traded copper producer, climbed 8.1 percent.

Gold was little changed, after rising earlier as Trump’s win promises to reshape the relationship of the U.S. with the world, and the potential for unpredictability in American policy fuels speculation that the Federal Reserve will delay raising interest rates.

Bullion for immediate delivery gained the most since Britain’s surprise vote to leave the European Union in June, and ended Wednesday up 0.2 percent at $1,277.98 an ounce, according to Bloomberg generic pricing.

Precious metals producer Fresnillo Plc advanced 11 percent in London, with Centamin Plc up 6.3 percent and Randgold Resources Plc 5 percent. In Australia, Newcrest Mining Ltd. jumped 9.8 percent.

Bellwethers of global trade recovered from early lows.

U.S. West Texas Intermediate oil dropped as much as 4.3 percent on the New York Mercantile Exchange before recovering to settle 0.6 percent higher at $45.27 a barrel. Wheat, corn and soybean futures dropped on the Chicago Board of Trade. A Trump win puts pressure on agricultural commodities because of his anti-trade sentiment, according to Bloomberg Intelligence analyst Mike McGlone. The U.S. is the largest exporter of corn and soybeans.

“Markets are having a knee-jerk reaction as they always do during times of high uncertainty like elections,” said Peter Lee, a BMI Research analyst. “It’s inevitable that there’s a rush to safer assets, and money will flow to sectors like gold and less risky options. We’re expecting to see a lot of volatility.”

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