Analysts at NAB suggest that stability in financial markets over 2017 and early 2018 came to abrupt end in recent weeks, with a surge in market volatility and big falls in equity markets and prices for many commodities. 

Key Quotes

“However, it was partly encouraging news on wages in the US that triggered the reaction -- given its implications for central bank tightening --  with underlying fundamentals for most of the commodity complex remaining intact (assuming volatile conditions do not persist). That said, compositional shifts in global growth drivers – with the more advanced economies now leading the way – is likely to have significant implications for certain commodity markets, particularly for Australian exporters as demand from China shifts down a gear.”

“The USD has also been less of a drag on commodity demand than previously expected, having actually depreciated against major currencies in the final months of 2017. Supply side factors have been relatively favourable for prices across much of the complex as well since late last year.”

“Overall, we have made some upward revisions to our outlook for commodity prices from three months ago, which partly reflects spot price movements since November despite oscillations in some markets more recently.”