Details Cookies
United Kingdom
Important margin product information

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs, FX or any of our other products work and whether you can afford to take the high risk of losing your money.

Cookie policy

This website uses cookies to offer you a better browsing experience by enabling, optimising and analysing site operations, as well as to provide personalised ad content and allow you to connect to social media. By choosing “Accept all” you consent to the use of cookies and the related processing of personal data. Select “Manage consent” to manage your consent preferences. You can change your preferences or retract your consent at any time via the cookie policy page. Please view our cookie policy here and our privacy policy here

Train Train Train

Commodities are the new black and your inflation fighting friend

Equities 4 minutes to read
Jessica Amir

Market Strategist

Summary:  A protracted market correction looks to be happening, and the recovery is expected to be slow. Inflation is likely to continue for the longer term. So, investors might like to consider that commodities offer inflation protection. With the cost of raw materials and energy likely to go up, investors could turn to commodity-focused stocks to take shelter in the storm. We cover three reasons to look at commodities stocks, and six stocks to perhaps take a look at that have garnered a lot of attention and also outperformed the market since the November market downturn.

Many investors have seen markets rise over the long-term, while newer investors might be accustom to seeing sharp falls and a quick recovery, almost -V-shape like, which have helped to smooth over market blips. However, the markets in Australia and the US are currently very bearish against a backdrop of rising inflation and the first increases in interest rates in over a decade, which is affecting companies’ ability to make more money.

A protracted market correction looks to be happening, and the recovery is expected to be slow. This is reminiscent of what occurred in 1973, 2000, and 2007, where it took the markets about four years to recover.

So, what can investors consider to ride out the market?

In the next year or so, with inflation, the cost of raw materials and energy are likely to go up, investors could turn to commodity-focused stocks to take shelter in the storm.

The following Three considerations present compelling reasons to invest in commodities:

1- Inflation is an ally to commodities

Some of the largest companies in the world have flagged that wage inflation and supply issues have caused blowouts in expenditures, and have passed cost increases onto consumers, while also accepting slimmer margins. Being at the starting point of production value chains, commodity companies are better equipped to thrive in the current market with earnings growth from the price increase of raw materials being better able to keep pace with costs. Furthermore, central banks are expected to announce more aggressive interest rate rises. This means that inflation is expected to persist and pull up commodity prices.

2- Commodities have been a proven bet

Generally when inflation rises, commodity stocks do well. We saw this since November. In fact, in the first quarter of this year, average earnings in the energy and materials sector have surged, and bucked the trend of declining earnings growth in the general US market. With scale, large commodity companies with strong balance sheets and free cash flows are more likely to withstand the bearish conditions. The market has already begun to appreciate this, with share prices of quality commodity companies being on the up and up.

Free cashflows to activate share buybacks

With stellar performances bolstering the earnings and cashflows of some commodity companies, they may conduct share buybacks. This reduces the number of their shares available to the market. This should have a hand in driving up their share prices too.

A key takeaway from all this, is to look out for resource-focused companies who are growing their earnings and cashflows into the future. Some companies that are showing that kind of promise are:

In the US

  • Sociedad Quimica y Minera de Chile (SQM shares are up 83% from November)
  • Halliburton (HAL shares are up 77% from November)
  • Barrick Gold (GOLD shares are up 13% from November)

On the ASX

  • BHP (BHP shares are up 30% since November)
  • Woodside (WPL shares are up 35% since November)
  • Graincorp (GNC shares are up 59% from November)  

In addition, as uncertainty taints the broad market with increased volatility, the US dollar appears to be a good hedge in being the preferred holding currency of investors. There are Exchange Traded Funds (ETFs) that offer exposure to the rising US dollar. Investing in such ETFs may also help to diversify risk.

And lastly, to summarize;  with wealth preservation in mind, now’s the time for investors to turn their focus towards resilient and defensive investments; offering rising cashflows and earnings, as the previously white-hot market spots continue to cool down.

More details on potential market opportunities for 2022, more can be found here.


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
United Kingdom

Support Centre
For existing clients, please click here to request support via the Support Centre.

Have a question about our products, platforms or services? Visit the Support Centre to find answers for our most frequently asked questions. If you are still unable to locate an answer to your question, you will also find contact details for your local Saxo office to speak with a representative.

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets UK Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.