Commodities from soybeans to precious metals jumped after China eased some COVID-19 restrictions, raising hopes of a demand recovery in the world’s second-biggest economy.
Almost all major commodities traded higher following China’s announcement.
Copper, precious metals and agricultural commodities from corn to wheat all climbed and as did shares of companies across the sector.
Photo: Bloomberg
China’s loosening of restrictions bolstered a rally that began on Wall Street, with risk assets rising after US inflation slowed.
Markets interpreted the data as a sign that the US Federal Reserve could slow down its aggressive interest rate hike plans.
A gauge of the US dollar has fallen sharply from its annual high, aiding commodities priced in the currency.
“Fundamentally the more China can restart its economy the greater the positive impact on global growth expectations,” Romco Group trading head Keith Wildie said. “China has historically been an exporter of deflationary pressures, and if we see that deflationary force back within the global economy then the positive impact on commodity prices and asset markets in general could be exceptionally significant in the near term.”
Base metals traded on the London Metal Exchange jumped, with zinc soaring as much as 6.4 percent and aluminum gaining 5.9 percent.
In the US, Chicago soybean futures had the biggest intraday increase in a month.
Shares of companies across the commodities industry surged.
Century Aluminum Co jumped 23 percent, the most in six years, while top US producer Alcoa Corp surged as much as 16 percent.
Offshore oil and gas driller Transocean Ltd added as much as 14 percent and oil refiner Phillips 66 climbed 5.6 percent to the highest since January 2020.
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