Sector movers: Miners and Big Oil lead advance, Goldman bullish

Commodity prices jumped at the start of the week, with crude oil futures climbing to three-week highs while copper futures bounced back after a retreat in the previous week that saw them trim their year-to-date gain to 18%.

Helping to stoke buying interest, the US dollar spot index spent much of the session lower after 10 consecutive days of gains, its longest such stretch in over three years.

Reflecting the more positive sentiment in the market, analysts at Maquarie told clients that: "Feedback from last week’s CESCO conference in Shanghai will likely be a hot topic [...] overall sentiment was solid, with most Chinese players we spoke to expecting good demand for next year (3-5%) on sustained government stimulus policies and continued signal strength from both customers and national data.

"[...] From here, the outlook from the hedge funds we spoke to ranged from neutral to cautiously bullish," analysts at Macquarie said in a research note sent to clients."

On the other side of the argument, in a research report sent to clients analysts at Goldman Sachs said they believed that "while part of the rally has been warranted, prices have rallied too much too soon, and we expect copper will decline to c.$5,000/t on a 3-mo view."

"Copper prices have rallied sharply and net speculative positioning has reached its highest level since 2005 over the past two months," Goldman added.

To take note of, net long positions in copper futures and options rose by 19% to 70.456 lots during the week ending on 15 November, according to data published by the Commodity Futures Trading Commission on 18 November.

Some traders also linked recent strength in commodities to a buying spree by Chinese investors looking to sidestep weakness in the country´s currency.

In any case, in the same report Goldman Sachs upped its forecast for gains in the Goldman Sachs Commodities Index over a three, six and twelve-month view from -2.0%/+1.7%/8.3% to 9.0%/11.0%/6.0% and recommended clients 'overweight' the asset class on a three and twelve-month basis.

Among other commodities, they upgraded their view for iron ore prices, predicting they would be at $55 a tonne in 12 months´ time (and at $63 in six months), in part because steel consumption was proving to be more resilient than expected.

"A bullish dollar view is not incompatible with a bullish commodity view," Goldman also said.

Just as well, as by 1938 GMT the US dollar spot index had recouped nearly all of the day´s losses and was drifting lower by just 0.07% to 101.11, alongside a 4.1% advance for front month Brent crude oil futures to $48.86 on the ICE.

Oil prices on the other hand saw sharp gains as Russian president Vladimir Puting and officials from Iran and Iraq weighed in with conciliatory remarks ahead of OPEC´s next regularly-scheduled summit on 30 November, in Vienna.

In parallel, March 2017 COMEX-traded copper futures could be seen rising 2.06% to $2.5290 per pound.

Top performing sectors so far today

Industrial Metals & Mining 2,368.62 +1.99%
Mining 14,236.48 +1.80%
Oil & Gas Producers 7,604.86 +1.64%
Automobiles & Parts 7,226.96 +1.58%
Forestry & Paper 17,104.92 +1.28%

Bottom performing sectors so far today
Technology Hardware & Equipment 943.75 -3.79%
Real Estate Investment & Services 2,329.87 -1.48%
Real Estate Investment Trusts 2,714.55 -1.43%
Mobile Telecommunications 4,550.52 -1.41%
Financial Services 9,287.71 -1.16%