Taking the lead from energy, most commodity prices rose this week as hopes of an imminent ceasefire in Ukraine faded and Western leaders met to consider further sanctions on Russia. Meanwhile, Putin’s announcement that natural gas purchases could only be made in rubles merely served to underscore that Russia cannot be relied upon as an energy supplier given that it would involve ripping up existing contracts.
The extreme volatility in commodity prices is likely to continue next week, with the newsflow from Ukraine remaining the key driver of prices. Elsewhere, the March manufacturing PMI data out of China will give some indication of the impact of COVID-19 lockdowns. We suspect that the service sector will bear the major brunt of the containment measures, but there are reports that factories are suffering from labour shortages. A weak China PMI reading might take some of the heat out of metals prices.
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