Although sellers are unlikely to offer seasonal discounts, commodities markets have enjoyed strong buying in the handful of trading days since Christmas. As a result, the prices of most major industrial and precious commodities are well up, with rises of at least 2.5 per cent in near-term futures contracts for aluminium, palladium, iron ore and zinc.
Brent crude also extended the strong rally experienced before the holiday season, rising 3 per cent since Boxing Day to almost $67 (£49.4) a barrel, a level not seen since May 2015. Amid expectations that Opec will continue to keep a lid on supply, speculators have accumulated a record bull position, as measured by the net long position in futures and options contracts. Widespread protests and social unrest across Iran, one of the world’s largest producers, has added to the price momentum.
Elsewhere, gold pushed back above $1,300 an ounce, buoyed by strong buying in Asia, nuclear button-themed tweets from the President of the United States, and expectations of slower interest rate hikes from the Federal Reserve.
Added to this has been further weakness in the dollar, which started the year on Tuesday at its lowest point in three months, as measured against a basket of foreign currencies. That, on top of the weakest year for the greenback in 14 years, should bode well for the earnings of resources companies. Indeed, investors in mining stocks have already felt the bump, with the FTSE 350 Mining Index (NMX1770) up 5 per cent since 27 December.
