Goldman Says Commodities, Stocks Diverge as Stockpiles Increase

Goldman Sachs Group Inc. said that returns from commodities have diverged from developed equity markets amid expectations for rising metal stockpiles and energy supplies, maintaining its neutral outlook on raw materials.

Commodity returns as gauged by the Standard & Poor’s GSCI Enhanced index will be 1.6 percent over 12 months, analysts led by Jeffrey Currie wrote in a report dated yesterday. That compares with an earlier estimate for a 2.5 percent return, according to an April 23 report. Goldman is most bearish on agriculture, forecasting a 13 percent loss over 12 months.

The Standard & Poor’s 500 Index advanced to a record yesterday, bolstered by improving confidence in the world’s largest economy as the U.S. Federal Reserve presses with unprecedented stimulus. Commodities as tracked by the S&P GSCI Enhanced index are 3.9 percent lower in 2013 as copper, corn and gold declined. Money managers are the most bearish on commodities in more than four years, with a net 29 percent underweight, a Bank of America Corp. survey showed yesterday.

The divergence between commodities and developed stocks “represents a significant departure from the past decade, where correlations across assets were particularly high,” New York-based Currie wrote. “Given where we are in the current business cycle with excess capacity and slow growth, the lack of commodity returns and volatility should be expected.”

Industrial metals led by copper have a more bullish near-term outlook, while energy is estimated to deliver a return of 5 percent over a year, Goldman said. The selloff in gold had been faster than expected, and further sales from exchange-traded products may push prices lower, the analysts wrote.

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