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
