Increase popularity in metals

A red hot slab of steel is cut as it moves along a conveyor at the ArcelorMittal Ostrava a.s plant in Ostrava, Czech Republic, on Friday, Oct. 19, 2018. Liberty House Group has extended its buying spree after the closely held metals group offered to buy four European steel assets from top producer ArcelorMittal, including the Ostrava plant. Photographer: Martin Divisek/Bloomberg

Likewise, the pressure of strengthening the dollar has come down. Consequently, from this, the metals sector remains the unconditional potential of the normalization of the volatility of the stock market. Being that, on the other hand, gold has the biggest advantage if the shares continue to decrease. Especially if US stocks return more compared to the world. It should be noted that the dollar should decrease and metals and basic products, in general, would benefit. Being that, the potential for gold appreciation remains disconcerting.

In addition to this, industrial metals have compensated a discount in a bull market. Meanwhile, the implications of a sustained decline should increase risks for securities markets. For some, it is necessary to continue the strength or weakness of the dollar in emerging market equities. This in order to appease the bears of the metals sector.

Data to highlight

It is necessary to emphasize that the average reversion potential is high. In fact, due to an increase of around 7% in 2018 through October 30, the broad trade-weighted dollar is a primary suppressor of the metal price. It should be noted that this is established as similar to the MSCI Emerging Markets index. Since this has decreased by around 20%. While at the pace of its worst year since 2008, emerging market equities have had a limited fall.

But you should not leave aside the dollar and that the strength of it has limited space. Since near the peaks of 2002 and 2016, the dollar seems to be advancing in a chain, especially in the back of the US stock market. UU The annual correlations of the metals index since 1997 are minus 0.7 against the dollar and more 0.82 relative to the EM shares.

For its part, copper and industrial metals have provided a sufficient reduction under the weight of falling stock prices. Staying much lower would have adverse macroeconomic implications. Especially for the actions. It should be noted that the volatility of stocks is normalizing, although copper is likely to provide a fall in a nascent bear market.

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Source: Bloomberg