Broad-based recovery leaving energy behind

The prices of most commodities rose this week, with the exception of energy. In particular, industrial metal prices rose alongside Chinese equities. Elsewhere, the European economic recovery is starting to look remarkably V-shaped, despite localised outbreaks of coronavirus. Yet, high-frequency data in the US suggest coronavirus fears are slowing the economic recovery there. We think that uncertainty surrounding the course of the virus will keep the ongoing recovery in commodity prices in check. Next week, data from China will be a key driver of prices. Market participants will be closely watching the release of trade and industrial activity data for June, which will give an indication of the strength of China’s economic recovery and, in turn, the underpinnings for the continued recovery in many commodity prices during the month. We think that stronger investment is likely to have fed through to industry, in turn pushing output growth back to near its pre-virus rate.