Commodity companies are beginning to feel the impact of President Donald Trump’s trade policies, and their earnings report cards will signal how well they’ve been able to protect shareholder value.
Raw-material producers are coming off their worst week since February after the longest quarterly sell-off in commodities since 2015. Demand concerns mounted after the International Monetary Fund cut its global growth forecast, in part due to escalating trade tensions. Amid the tumult, energy markets have been a rare bright spot, with oil and natural gas reaching multiyear highs in 2018.
Industrial-metal miners are bearing the brunt of Trump’s tariffs, with Alcoa Corp. forecast to post its weakest quarterly earnings since it split from its jet- and car-parts business in late 2016. In agriculture, producers still face low prices but a volatility pickup may help traders. While higher steel prices —a consequence of metal levies — boosted costs for some oil companies, these are no match for the strong tailwind from the rally in crude.
“There’s a dichotomy in performance between the metals and the energy side,” said Peter Sorrentino, the Dallas-based chief investment officer of Comerica Asset Management Group, which oversees $67 billion. “Industrial metals and even precious metals for the most part have been under pressure from a strong dollar, and most of the energy components have done better, from crude oil to even natural gas.”