Market Musings 030526: Obvious themes, and what themes are emerging

Market Musings 030526: 
Obvious themes, and what themes are emerging

Podcast this week:
Look for an entry point in commodities

2026 is proving to be another banner year for commodities. The Bloomberg equal-weight commodities index has risen 23% since the start of the year, following a 21% return for calendar 2025. All four main subindices are contributing to this strong performance, led by energy (oil & gas), but with industrial metals also performing strongly thanks in large part to aluminium (the closure of the Strait of Hormuz has reduced global aluminium supply by c. 9%).

While an eventual reopening of the Strait of Hormuz should trigger a near-term cooling of energy prices and thus a potential pull-back in commodity indices, we believe that the current bull market in place since early 2020 can continue in the medium term and maintain positive views on both precious metals (gold, silver) and strategic industrial metals (copper, aluminium). The global metals & mining sector is also well placed to continue to outperform the broader stock market on higher commodity prices, effective capital discipline and the potential for further sector consolidation.

Current themes: All about AI (again) and Energy

April has proven a strong month for global stocks, led by the US and Emerging Markets. Overall, the MSCI All Country World Index has breached a new all-time high, in spite of persistent Iranian conflict uncertainty amid the current fragile ceasefire. 

ACWI: MSCI All Country World Index ETF

The two investment themes dominating stocks continue to be:

A. Artificial Intelligence investment and data centres

B. Energy given the ongoing blockade of the Strait of Hormuz

Within the AI theme, strong subthemes include: 

a) Semiconductor and memory makers,
b) electricity power generation and transmission equipment suppliers, and
c) Photonics.

SOXX: Semiconductor ETF

GRID: US electricity generation and transmission companies

Energy includes the following trending subthemes:

a) US Natural Gas Producers
b) Oil Equipment & Services
c) Renewable Energy
d) Lithium and Battery Technology

FCG: US Natural Gas ETF

OIH: Oil Equipment & Services ETF

INRG: Renewable Energy ETF

LIT: Lithium & Battery Technology ETF

But what new themes are emerging?

Commodities are a consistent performer outside of stocks, driven latterly by energy (oil, gas) and also by agricultural produce such as soybeans, cattle and wheat. This is a change from 2025 when previous and industrial metals momentum was the main driving force behind commodity index strength. 

Like the surge in energy prices, this uptrend is linked to the ongoing Hormuz blockade, as global fertiliser supply of nitrogen/urea-based fertiliser has been interrupted. 

 BCI: Commodities ETF

 

DBA: Invesco DB Agriculture ETF

Value is a persistent theme, for all the excitement over the AI theme and Technology more generally. Cheaper sectors in the form of Oil & Gas, Banks and even now Chemicals continue to beat Growth (eg Technology), as it has done since the start of 2025.

US  Value (VLUE ETF) outperforms the Nasdaq 100 (QQQ ETF) - since November 2025

Also true in Europe: MSCI Europe Value (VLUE ETF) v MSCI Europe Growth ETF

European Banks recover post strong Q1 earnings results (EXV1 ETF)

Interestingly, precious metals miners (gold, silver miners) have become value stocks given the strong progression in their sales and profits, thanks in large part to much higher hold and silver prices. At current gold, silver, copper and aluminium prices, mining company valuations look attractive at a time when earnings growth is strong, sector consolidation continues and miners are returning cash to shareholders via higher dividends and share buybacks. A similar playbook to what we have witnessed with the Banks sector in recent years…

GDX: Gold Miners ETF corrected from highs even as earnings surge

Let’s hope for good news on the geopolitical front this coming week,

Edmund