NEW YORK, May 11, 2016 /PRNewswire/ -- Commodities increased in April, driven by positive supply factors and macroeconomic events, according to Credit Suisse Asset Management.
The Bloomberg Commodity Index Total Return performance was positive for the month, with 18 out of 22 Index constituents posting gains.
Credit Suisse Asset Management observed the following:
- Energy was the best performing sector, up 13.43%, led by Brent and WTI Crude Oil. Although the April 17th OPEC meeting in Doha did not result in an output freeze, production outages in Kuwait, Nigeria and Venezuela, and U.S. production cuts, reduced supply expectations. The U.S. Energy Information Administration reported that domestic crude oil production fell for the eighth consecutive week.
- Precious Metals gained 7.26%, led by Silver, amid a weakening U.S. Dollar after the U.S. Federal Reserve left interest rates unchanged. The Bank of Japan surprised markets by holding off on additional stimulus measures, strengthening the Japanese Yen versus the Dollar.
- Industrial Metals increased 7.18%, led by Nickel, as positive Chinese economic data, including better-than-expected industrial production figures, signaled that central bank stimulus may be working, supporting base metals demand expectations.
- Agriculture gained 7.03%, led by Soybean Meal, as excessive heavy rains in Argentina caused the harvest to be significantly delayed, reducing the production outlook for soybean meal and soybeans. Expectations for continued strong demand out of China were also supportive.
- Livestock was the worst performing sector, down 3.47%, led by Live Cattle, as the U.S. Department of Agriculture reported increased beef production during the month compared to the same period last year.
Nelson Louie, Global Head of Commodities for Credit Suisse Asset Management, said: "April was another positive month for commodities, with supply and demand fundamentals driving returns. Within Agriculture, weather disruptions may be the biggest potential source for tightening market conditions, with inventory currently at comfortable levels. Although the global El Niño effects are dissipating, a La Niña weather event may follow near-term, potentially changing the crop yield outlook. Within Energy, geopolitical events may continue to impact oil infrastructure. As OPEC spare capacity remains at record lows, any signs of geopolitical tension or unforeseen production outages, may help further reduce the supply/demand balance. Meanwhile, U.S. production declines may continue, though inventory has yet to materially decrease, remaining above normal levels going into the U.S. driving season."
Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added, "Global growth expectations will also be a main focus of commodity returns. The European Central Bank remains committed to stimulus measures, while positive Chinese economic data indicated a stabilizing economy. Global commodity demand may gain momentum if current Chinese growth begins to accelerate. The U.S. Federal Reserve is likely to remain highly accommodative. U.S. inflation expectations remain low, despite a strong labor market and signs of upward wage pressures. Should inflation increase faster than anticipated, commodities may prove as a valuable asset class diversifier."
About the Credit Suisse Total Commodity Return Strategy
Credit Suisse's Total Commodity Return Strategy is managed by a team with over 28 years of experience, and seeks to outperform the return of a commodities index, such as the Bloomberg Commodity Index Total Return or the S&P GSCI Total Return Index, using both a quantitative and qualitative commodity research process. Commodity index total returns are achieved through:
- Spot Return: price return on specified commodity futures contracts;
- Roll Yield: impact due to migration of futures positions from near to far contracts; and
- Collateral Yield: return earned on collateral for the futures.
As of April 30, 2016, the Team managed approximately USD 8.3 billion in assets globally.
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This document was produced by and the opinions expressed are those of Credit Suisse as of the date of writing and are subject to change without obligation to update. It has been prepared solely for information purposes and for the use of the recipient. It does not constitute an offer or an invitation by or on behalf of Credit Suisse to any person to buy or sell any security. Any reference to past performance is not a guide to future performance. The information and analysis contained in this publication have been compiled or arrived at from sources believed to be reliable but Credit Suisse does not make any representation as to their accuracy or completeness and does not accept liability for any loss arising from the use hereof.
Certain information contained in this document constitutes "Forward-Looking Statements" (including observations about markets and industry and regulatory trends as of the original date of this document), which can be identified by the use of forward-looking terminology such as "may", "will", "should", "expect", "anticipate", "target", "project", "estimate", "intend", "continue" or "believe", or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties beyond our control, actual events, results or performance may differ materially from those reflected or contemplated in such forward-looking statements. Readers are cautioned not to place undue reliance on such statements. Credit Suisse has no obligation to update any of the forward-looking statements in this document.
Certain risks relating to investing in Commodities and Commodity-Linked Investments: Exposure to commodity markets should only form a small part of a diversified portfolio. Investment in commodity markets may not be suitable for all investors. Commodity investments will be affected by changes in overall market movements, commodity volatility, exchange-rate movements, changes in interest rates, and factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Commodity markets are highly volatile. The risk of loss in commodities and commodity-linked investments can be substantial. There is generally a high degree of leverage in commodity investing that can significantly magnify losses. Gains or losses from speculative derivative positions may be much greater than the derivative's original cost. An investment in commodities is not a complete investment program and should represent only a portion of an investor's portfolio management strategy.
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SOURCE Credit Suisse AG