The commodity market rose slightly higher in March despite uncertainty stemming from the Eurozone and mixed macroeconomic indicators, according to a Credit Suisse Report.
The Dow Jones-UBS Commodity Index Total Return increased 0.67% in March. Overall, 10 out of 22 index constituents posted positive returns. Energy was the best performing sector, up 6.29%, led by Natural Gas on the back of continued larger-than-consensus storage withdrawals. Weather forecasts remained colder than normal, supporting heating demand. Precious Metals increased 0.63%, as per the Credit Suisse Report.
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The Cyprus uncertainty of solidifying a bailout deal with the European Central Bank led investors to look towards gold as a safe haven, though it also led to a higher US dollar. Industrial metals was the worst performing sector, down 4.53%, as events in Europe set the tone for base metals over the course of the month.
Nelson Louie, global head of commodities in Credit Suisse’s Asset Management business, said, "The market’s focus has been on risks stemming from Europe along with emerging market demand concerns. The US equity market has largely bucked these concerns and continued to move higher, choosing to focus on encouraging domestic signs.
"US consumer confidence continued to recover, with the March reading near its highest level since 2007. The housing recovery continued to gain steam, with home prices higher for much of the country. However, commodities have been more sanguine, keeping with the broader global theme of higher risk aversion based on macroeconomic concerns."
Christopher Burton, senior portfolio manager for the Credit Suisse Total Commodity Return Strategy, added: "Events in the Eurozone as well as fluctuations in global growth expectations will continue to play a role in commodity market movements. However, we remain concerned with the long-term implications of ongoing monetary stimulus and its potential impact on unexpected inflation risk."
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