UNITED KINGDOM January 05 2017 10:11 AM
LONDON (Scrap Register): Brokerage SP Angel suggests commodities and shares of mining companies may become more volatile and sensitive to political action.
Donald Trump’s election (as U.S. president) is the principal catalyst, along with his new emphasis on U.S. infrastructure growth. Raising the finance for Trump’s new construction could cause some big swings in emerging-market currencies as funds are repatriated into the U.S. Dollar.
Local businesses and investors sometimes stock up on commodities as protection against currency weakness, as has occurred in China, but can also be fast to sell after devaluation.
The supply-demand balance may become less relevant as political factors have (become) greater.
Europe offers potential to influence commodity prices perhaps more on the downside. Mining equities are likely to continue to rise albeit in a volatile manner through the year, the firm added.