“Commodities will decline this quarter as central banks in the U.S. and Europe refrain from adding further stimulus, removing the driver that helped to lift prices in the first three months, according to UBS AG. (UBSN)
“In the absence of further injections in the second quarter, we expect prices to drift lower,” analysts led by Hong Kong-based Peter Hickson said in an e-mailed report today. Crude oil, copper, nickel and cotton may decline, the report said.
Goldman Sachs Group Inc. cut its three-month outlook on commodities to neutral from overweight on March 28, saying that most raw materials reached targets after gaining and economic growth may soften in the second quarter. Commodity-exporting nations face the risk of lower prices in the coming months, the International Monetary Fund said on April 10.
Statements from the Federal Reserve’s Open Market Committee “suggest the likelihood of further quantitative easing is minimal,” the UBS analysts wrote. “A more durable global economic recovery has heightened concerns about rising interest rates and a stronger U.S. dollar.”
The Standard & Poor’s GSCI index of 24 raw materials has lost 1.2 percent since the end of March, eroding the 6.8 percent rally in the first quarter. Brent crude for May was little changed at $120.22 a barrel at 5:14 p.m. in Singapore, with the most-active contract 2.2 percent lower this quarter. Brent may lose $10 on higher Saudi oil output, UBS said….”
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