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Trump, sanctions and tariffs – how will they affect commodities?

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Saxo Bank has published its Q4 2018 Quarterly Outlook for global markets. Against an uncertain backdrop, the Outlook offered some interesting insight into the commodity markets.

The direction of many major commodities will continue to be influenced by the decisions taken in Washington during the past six months. Apart from the weather, which has delivered challenges as well as opportunities across the agriculture sector, President Donald Trump’s trade war with China and sanctions against Iran will keep setting the tone for the rest of the year.

Ole Hansen, Head of Commodity Strategy, said: “The trade war, especially with China, shows no signs of easing. At least not before the November midterm elections, with Democrats generally favouring Trump’s tough stance towards China. Accepting this fact, China has shown little interest in trying to find a solution before the US elections. While growth and demand-dependent commodities, such as industrial metals, have been left reeling, energy prices have risen sharply in response to the November introduction of US sanctions on Iran’s oil trade.

”With the risk of a prolonged trade war and rising oil prices due to sanctions, the global economy may struggle to maintain its long-held positive momentum. The combination of rising energy prices and the hitherto strong dollar, not least against many emerging market currencies, will act as an unwelcome tax on consumers. ”

You can access Saxo Bank’s full Q4 2018 outlook, with more in-depth pieces from their analysts and strategists here. You can find out more about Saxo Bank’s UK business, Saxo Capital Markets, here. 

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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