Commodity ETFs Strengthen on Improving China, Global Outlook | ETF Trends

With improved economic data coming out of China, investors may look back into commodities and related ETFs for the year ahead as the biggest consumer of raw materials ramps ups growth.

Recent data out of China, the second largest economy in the world and largest consumer of commodities, revealed growth in retail sales and industrial output accelerated in November, the Wall Street Journal reports.

Chinese industrial output for November was 6.2% higher year-over-year, compared to a 4.7% year-over-year increase in October. Meanwhile, retail sales advanced 8% in November year-over-year, compared to October’s 7.2% rise.

Further adding to the optimism, the U.S. and China have come to terms with an initial trade accord.

Looking ahead, analysts argued that more upbeat data points could help lift commodities even higher.

“Hopes for a sustained recovery in global manufacturing have boosted demand prospects” for copper, JPMorgan Chase analysts Natasha Kaneva and Gregory Shearer said in a note.

Some are even keeping an eye on a stabilizing Eurozone to help further support the world economy heading into 2020.

Because many remain cautious on commodities due to large supply of materials, some analysts also believed that unwinding bearish bets could provide even more momentum in a commodity rally.

Commodity ETF Plays

ETF investors who are interested in gaining exposure to commodities have a number a ways to access the various markets. For example, the Invesco DB Commodity Index Tracking Fund (NYSEArca: DBC), iShares S&P GSCI Commodity-Indexed Trust (NYSEARCA: GSG) and United States Commodity Index Fund (NYSEArca: USCI) provide broad commodities market exposure.

Alternatively, ETF investors can look to more targeted single-commodity ETF options. For instance, among the more popular plays, the United States Oil Fund (NYSEArca: USO) tracks West Texas Intermediate crude oil futures, the United States Brent Oil Fund (NYSEArca: BNO) tracks Brent crude oil futures iPath Series B Bloomberg Copper Subindex Total Return ETN (NYSEArca: JJC) provides a play on copper price moves.

For more information on the commodities market, visit our commodity ETFs category.