Yesterday, prices of commodities surged all around the world. Prices of zinc increased by 1.6% to 2,960 USD per ton while copper advanced 2.0% to 8,070 USD per ton. Another strategic commodity, nickel, climbed 2.5% all the way to 33,030 USD per ton. The interest rate cut in the US obviously spurs demand for metals that can be used in the industrial and housing markets. The global economy is trong enough and can push prices of commodities higher. Global resources are limited while demand is going to increase.

Increasing prices of commodities automatically made shares of commodity-realted companies much more attractive to investors. Major Asian indices climbed throughout the day. The Morgan Stanley Capital International Asia-Pacific Index gained 0.6% to 158.49, the highest level since the end of July. The Japanese benchmark index, the Nikkei 225, rallied 0.6% to 16,401.73 even though exchanges were shut due to a holiday. Stock exchanges in Taiwan and Korea are still closed.

The biggest gainers included trading companies. Sumitomo Titanium Corporation rallied 12% to 9,640 yen while the biggest trading Japanese company, Mitsubishi Corporation climbed 3.4% to 3,680. Mitsui & Company added 3.9% to 2,785. Japanese carmakers gained on the news General Motors is experiencing. GM’s employees went on strike, giving a chance to Japanese auto producers to gain more ground on the crucial US market. Honda climbed 1.6% to 3,810 yen while Toyota gained 1.2% to 6,640 yen. 

The Asian economy remains solid but is still affected by its biggest exporter, the United States. Growth of Asian equities should continue as the interest rate cut is expected to lift the US housing market from recession, boosting metal prices at the same time. More news on the US housing market will be released today in the Existing Home Sales publication and Thursday’s New Home Sales report.

Adam Narczewski