Surging Commodity Prices Could Break the Great Divergence Trade
- ‘Rest of the world may be able to catch up’: Weeden’s Purves
- Higher prices may put pressure on U.S. dollar, lift EM
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Voices across Wall Street are anticipating the convergence of U.S. markets with the rest of the world. Higher commodity prices might just make it happen.
With OPEC signaling it won’t boost output to cap oil prices, Brent crude surged to a four-year high. Copper also rebounded, putting Bloomberg’s commodity index on a six-day tear that comes at the same time American equities are losing their edge against overseas counterparts. Dollar weakness may follow, a growing chorus of analysts say, further boosting emerging markets that benefit from rising commodity prices and closing the gap with the U.S.