LIVE MARKETS-Wells Fargo sees a rotation opportunity inside commodities

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WELLS FARGO SEES A ROTATION OPPORTUNITY INSIDE COMMODITIES

While headlines continue to grab investors’ attention, Scott Wren, senior global market strategist at the Wells Fargo Investment Institute, says he’s keeping his eyes on something more fundamental: where earnings growth looks strong and valuations still make sense.

In a note dated Wednesday, Wren pointed to a recent example of that approach in action. On April 6, WFII downgraded the energy sector from neutral to unfavorable, while upgrading technology from neutral to favorable — essentially signaling a shift out of energy and into tech.

At the same time, the firm kept a “most favorable” rating on financials and maintained favorable views on industrials and utilities.

Wren says a similar setup may now be emerging inside the commodities space. Energy‑related commodities surged into early April as oil prices jumped following the opening weeks of the U.S.–Israeli conflict with Iran. As oil rallied, other parts of the commodities market lagged, with prices for precious metals like gold and industrial metals such as copper coming under pressure.

According to Wren, gold in particular fell partly because international buyers sold the metal to raise U.S. dollars — dollars they needed to buy oil, which is priced in the U.S. currency.

Taken together, that divergence has created what Wren sees as an opportunity. He believes investors may want to consider reallocating away from energy‑focused commodities and toward precious metals, which remain WFII’s preferred segment within the broader commodities universe.

(Terence Gabriel)

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