According to Paul Bloxham, the chief economist for Australia, New Zealand, and global commodities at HSBC, commodity markets face the risk of greater fragmentation and supply disruptions if former U.S. President Donald Trump wins the 2024 presidential election and returns for a second term.
Bloxham’s comments come as speculation has heightened over the potential return of a Trump presidency, following a weak start by current U.S. President Joe Biden in the first presidential debate on Thursday.
Commodity markets, already grappling with high prices driven by structural supply constraints, also face uncertainties from geopolitical tensions, Bloxham told the Reuters Global Markets Forum.
“A rise in global trade protectionism or a shift in the pathway of that trend is a global macroeconomic risk we are watching out for,” Bloxham said. “This would increase the risk of greater fragmentation of commodity markets and create a supply disruption supporting commodity prices.”
Bloxham, who previously worked with the Reserve Bank of Australia’s economic analysis department, believes that geopolitics, climate change, and the energy transition are combining to create a global commodity market “super-squeeze.”
HSBC’s statistical model in May indicated a shift to a ‘super bull’ from a ‘weak bull’ phase in commodities, despite already elevated prices. According to Bloxham, commodity prices are unlikely to return to their previous trend and are set to remain “permanently higher.”
Bloxham expects large producers, particularly those involved in the energy transition materials such as copper, to benefit from the current market conditions. He also identified Latin American economies, the U.S., Australia, and Indonesia as potential winners.