Trump’s boost to the Australian economy

Donald Trump's presidency could drive significant fiscal stimulus and boost demand for metals, according to boutique fund manager, Terra Capital.

Terra Capital's portfolio manager, Matthew Langsford, said Terra Capital had maintained a bullish position to resources, as operational and capital costs had reduced over the last two year, while commodity prices were bottoming out.

The US election already had visible impacts on base metals, as gains were posted in copper, nickel, aluminum, zinc, lead, and nickel, he said. Copper also rallied to a 15-month high on the back of Trump's victory.

However, over the longer term, the US election result would boost commodity demand, given infrastructure spending would increase, taxes could be cut and inflation was rising, Langsford said.

"While the exact pathway for resources to return to favour is unclear, our view is that the upwelling in some commodities was a relief rally, and that is likely to continue and broaden into a wider recovery for commodities generally," Langsford said.

Langsford echoed the views of the Commonwealth Bank's global head of currency strategy, Richard Grace, who said the gloom in global equity markets was set to snap back in a big way.

"Like Grace, we believe that global equity investors will unearth huge buying opportunities", he said.

"Coal and iron ore were the stand outs amongst a relatively weak month for industrial metals during October. Iron ore finished October at its high (US$63.10/t) despite more obvious efforts from Chinese policy makers to slow selected housing markets down."

Coal was again up as hard coking coal surged to around A$230 (up from around $75-80 a few months ago), while thermal coal surpassed $100, and ended its five-year bear market (when prices hit as low $40), Langsford said.