China NPC brings good news for commodities

Most commodities prices rode the wave of a general uplift in investor sentiment this week. That said, prices have eased back slightly today despite encouraging signs from the National People’s Congress (NPC) in China. Although the stimulus package announced should prove a fillip for commodities demand and prices, the decision by the government to eschew a growth target for 2020 – together with concern about growing US-China trade tensions – has weighed on investor sentiment. Outside China, we expect demand to gradually pick up as lockdown restrictions are pared back. But, given the scale of the damage wrought by the virus, we expect only a modest recovery in prices by end-2020. Next week looks set to be a fairly quiet week for commodities markets in terms of new data releases. The most closely watched event is likely to be the release of more details on the policies outlined at China’s NPC. Of particular interest will be clarification on China’s infrastructure spending and policy plans.