Nov. 19 (Bloomberg) -- Commodities rose to a four-week high on optimism that a deal will be reached to avoid automatic U.S. spending cuts and tax increases, boosting the outlook for economic growth and demand for metals, energy and grains.
The Standard & Poor’s GSCI Spot Index of 24 raw materials rose as much 2.3 percent to 651.75, the highest since Oct. 22. Gains were led by sugar, which jumped the most since June. Oil reached the highest in four weeks amid concern that unrest in the Middle East will disrupt supplies. Copper climbed the most in nine weeks.
Commodities erased their 2012 loss after President Barack Obama said yesterday he’s “confident” about reaching an budget agreement with lawmakers to avoid the $607 so-called fiscal cliff. A group of European finance officials met in Paris today to try to forge a common position on Greece’s next aid payment. Sales of previously owned U.S. homes climbed in October, a private report showed.
“Investors are saying here that the politicians are taking steps in the right direction to find some resolution,” Greyson Colvin, the managing partner at New York-based Colvin & Co., which manages $22 million of assets said in a telephone interview. “Bullish home data is also giving us some hope that 2013 may be a better year.”
Twenty two of the commodities tracked by S&P climbed today. The gauge rose 2.3 percent to 651.44 as of 11:54 a.m. in New York, leaving it up 1 percent for the year.
Crude oil jumped as much as 2.9 percent as Israeli put ground forces on stand-by to invade the Gaza Strip for the first time in almost four years, should cease-fire efforts fail.
Raw materials are still headed for the smallest annual gain since a 43 percent loss in 2008 as stagnating global economies crimped demand. The “super cycle” of commodity prices gains has ended as China’s economy shifts to slower growth and supplies increase, Citigroup Inc. said today.
Prices won’t move “sharply” higher even as stimulus measures from global central banks lift growth and demand rebounds by the end of 2013, analysts led by New York-based Edward L. Morse, Citigroup’s global head of commodities research, said today in an e-mailed report.
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