- Bloomberg Commodity Index set for worst annual loss since 2008
- Investors are `buying the laggards of this year,' trader says
Freeport-McMoRan Inc., the world’s largest publicly traded copper producer, led a rally in mining and energy equities as a rebound in raw-materials prices gave investors reasons to cheer amid the worst rout in commodities since the global financial crisis.
Phoenix-based Freeport climbed 16 percent in New York, the most in almost four months, as industrial metals and oil advanced. The stock led gains in the Standard & Poor’s 500 Index and in a gauge of 18 base-metals companies tracked by Bloomberg Intelligence. Reports on Wednesday added to signs that U.S. growth is strengthening, while in China, the world’s biggest commodities buyer, indicators in December showed stabilization in the economy.
Freeport “is up with a lot of the high-levered copper names with the metal price in a broad rally,” David Gagliano, a New York-based analyst at BMO Capital Markets, said by telephone. Freeport has been among the worst performers on the Bloomberg Intelligence gauge, which is down 47 percent this year.
The Bloomberg Commodity Index, a measure of investor returns in 22 raw materials, is heading for the worst annual decline since 2008 after reaching a 16-year low last week. Slowing demand from China and growing gluts in industrial metals and energy had prompted the sell-off.
“People are buying the laggards of this year,” said Benno Galliker, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland. “It’s usual for the market to go higher the day before Christmas holidays, and the volumes are very thin so you can easily move the market.”
Oil companies rose as crude prices climbed, with Tullow Oil Plc advancing 10 percent in London, the second-biggest gain on the Stoxx Europe 600 Index. Steelmaker ArcelorMittal posted the biggest increase in the index. The MSCI World Energy Sector Index advanced. Royal Dutch Shell Plc, Europe’s largest oil company, increased as much as 5.2 percent in London after cutting spending plans for this year and next as it prepares to take over BG Group Plc.
Vancouver-based Teck Resources Ltd. jumped 9.3 percent, while London-based Anglo American Plc climbed 9.1 percent. ArcelorMittal advanced the most in more than four years after the U.S. Department of Commerce found that cheap imports from China were being sold at unfairly low prices.
U.S. gross domestic product expanded at a revised 2 percent annualized rate, a government report showed Tuesday, beating the median forecast in a Bloomberg survey. A government report Wednesday showed American consumers spent more as income rose in November, while the University of Michigan’s consumer sentiment index climbed this month to the highest since July. China will add monetary stimulus next year, making good on a pledge to support growth as leaders push through policies to cut overcapacity and reliance on credit, according to economists surveyed by Bloomberg.
Zinc for delivery in three months led the metals rally, rising as much 2.8 percent to $1,559 a metric ton on the London Metal Exchange. Aluminum advanced as much as 2.4 percent. Traders have been making purchases to close out bets on falling prices amid the 2016 Chinese stimulus talk, according to David Wilson, an analyst at Citigroup Inc. in London. The LME index is heading for the biggest annual loss since 2008 this year.
“They’ve fallen so much that a bounce is not unexpected,” said Wayne McCurrie, who helps manage 170 billion rand ($11.2 billion) at Momentum Wealth in South Africa. “The sheer extent of the fall can give you quite a strong bounce.”