Another area of strength in China has been the the property market, which continues to heat up – again mostly driven by policy easing. Given China is a major consumer of commodities, and particularly base metals, all of the above points to an improving demand dynamic for base metals.
So in the context of the solid China PMI numbers, it should be no surprise then to see base metals on a tear. Indeed, the largest base metals ETF has broken out of its trading range with what looks like a breakaway gap and a surge in relative (to other commodities) performance, as noted in theTuesday Technicals.
While China faces a complex set of structural challenges in its economy, which will ultimately see economic headwinds return, when the authorities decide to stimulate the economy it’s best not to fight it. And when it comes to China stimulus, commodities usually win.
This article originally appeared onSeeItMarket
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