- ANZ suggests commodities are oversold
- Barclays revises its sector order of preference
- Issues in oil and steel markets
- Price stability needed for palladium's fundamentals to dominate

By Chris Shaw

Having reviewed September quarter performance and market conditions ANZ Banking Group's October Commodity Call suggests commodity markets look oversold, but while there is uncertainty in financial markets prices are unlikely to rebound strongly.

The current uncertainty means investors appear to have priced in an emerging market contagion, a risky call in the view of ANZ. This leads the bank to suggest as financial conditions settle somewhat, investment funds should return to buy what remains a strong Chinese demand story.

The weakness in commodity markets over the past few months has been centred in the exchange-traded base metals and oil markets, ANZ noting these markets are larger and have more liquidity so are easier for investors to move in and out.