Hedge funds raised bullish commodity positions by the most since November as a jump in U.S. housing starts and the first acceleration in Chinese growth since 2010 drove prices to a three-month high.
Speculators increased net-long positions across 18 futures and options by 4.3% to 682,521 contracts in the week ended Jan. 15, the biggest gain since Nov. 27, U.S. Commodity Futures Trading Commission data show. Wagers on a soybean rally rose for the first time in four weeks on signs of improved demand for supplies from the U.S., the biggest exporter. Gold holdings rebounded from the lowest since August.
U.S. housing starts jumped 12% to a four-year high in December, capping the best year for the industry since 2008, the Commerce Department said Jan 17. China expanded a faster-than-expected 7.9% in the fourth quarter, government data showed the next day. Investors boosted commodity holdings by $20.4 billion last year, up from $14.6 billion in 2011, Barclays Plc estimates.
“The stabilizing housing sector adds to commodity demand, especially building materials,” said Mihir Worah, who manages Pacific Investment Management Co.’s Commodity Real Return Strategy Fund, with about $22 billion of assets. “Better growth in China is impacting copper and other base metals. We’re seeing increased investor flows into commodities, so supportive fundamentals along with increased investor flows are resulting in higher prices.”
The S&P GSCI climbed 1.7% last week and reached 661.02 on Jan. 18, the highest since Oct. 19. The MSCI All-Country World Index of equities rose 0.5%, and the dollar added 0.6% against a basket of six major trading partners. A Bank of America Corp. index shows Treasuries returned 0.1%. Gold, up 0.3% today, and silver, 0.4% higher, extended weekly gains.
Housing starts in the U.S. climbed last month to a 954,000 annual rate, exceeding all forecasts in a Bloomberg survey of economists. U.S. jobless claims decreased by 37,000 to 335,000 in the week through Jan. 12, the lowest since Jan. 19, 2008, according to the Labor Department.
China’s acceleration snapped a seven-quarter slowdown as government efforts drove a rebound in retail sales and the housing market. Industrial output in December rose a more-than-expected 10% and fixed-asset investment for the year gained 21%. Growth may quicken to 8% this quarter and 8.2% in the three months ended June 30, according to the median of 36 economist estimates compiled by Bloomberg.
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