Commodity stocks lift BBC Global 30

By Jamie Robertson Business presenter, BBC World News

We live in interesting times where we are witnessing one important economic phenomenon, one unfolding crisis and anxiously awaiting the possible development of another.

The Global 30 index of the world's biggest companies has a lot to say this month on all of this.

First, the phenomenon of re-emerging inflation: those companies which can latch on to rising commodity prices and widen their margins as they do so, have seen a bonanza in their share prices.

BHP Billiton rose 22.3% in April, China's oil production group CNOOC was up 19.9% and BP jumped 19.3%.

BHP and Rio Tinto are still arguing with the Chinese authorities over how much their iron ore contract will rise this year.

China has already agreed a hike of up to 71% with Brazil's Vale do Rio Doce and the expectation is that Rio Tinto and BHP will get more.

The oil price hovering around $120 a barrel has done wonders for CNOOC, BP and Exxon (up 10.4%).

Rising retailers

The rise in soft commodity prices has different effects on different sectors.

Best performing shares on the Global 30 Mitsubishi UFJ Financial - 27.14% BHP Billiton - 2.28% Electricite de France (EDF) 20.23% CNOOC (Red Chip) - 19.89% BP - 19.34%

Tesco shares rose 16%. Various analysts warned that food inflation could hit sales, but profits still beat all the estimates as price rises are being fed (sic) through to customers.

And the retailer is continuing to expand overseas, financing some of the new stores by selling properties in the UK.

Wal-Mart, the world's largest retailer, has said that credit card spending has been on the wane since August, but it insists that this is good news for its sales as it means people are keen to save money - and shop for the kind of heavily discounted items it is famous for.

Line in the sand

The crisis that is unfolding is, of course, the infamous credit crunch and the accompanying meltdown on banking balance sheets.

Worst performing shares on the Global 30 General Electric, down 11.33% Tokyo Elec Power, down 5.14% East Japan Railway, down 4.43% Procter & Gamble, down 3.97% Pfizer -3.58%

It is far from over and is still taking its toll on some stocks.

On the Global 30, General Electric was the most recent victim. Only a month ago, it was boasting that it had escaped the worst of the crunch, but has now had to admit to investors that its finance units are in trouble and that first quarter profits were down 12%.

However, despite the eye-watering write-downs that many banks have been forced to make, there is a feeling that some at least have managed to "draw a line under the problem".

To superstitious minds, this is a phrase that simply invites disaster and UBS's experience would bear that out: after a number of line-drawing exercises, it has now managed to write down some $38bn worth of mortgage-backed securities.

However, Mitsubishi UFJ, Japan's biggest bank, rose an astonishing 27.1% this month on the expectation that the worst really was behind it.

No recession?

It also seems to add weight to the theory that the Asian banks have managed to steer clear of this western crisis.

This last point is worth dwelling on, because China Mobile's shares have risen 16% on the expectation that the Chinese economy will continue to run along with 10% or so growth a year, allowing sales of mobile phones to preserve their upwards trajectory (a record 20% growth in the last quarter alone). The same might not be said of Nokia, whose shares fell 2.3% in April.

Energy firms do well in the current market

If Western economies slow, do people stop buying handsets?

Not according to Nokia's chief executive Olli-Pekka Kallavuo, who put handsets on a par with food.

"The mobile phone is a necessary item," he told analysts.

And this neatly leads on to the crisis that is pending, but which some believe may not emerge at all - a global recession.

Indeed the markets seem to be remarkably sanguine about this possibility at the moment, despite the horrendous figures emerging from the US housing market.

Defensive stocks such as Proctor and Gamble (down 4.0%), Tokyo Electric Power (down 5.1%) and Pfizer (down 3.6%) had disappointing performances.

If Mr Kallavuo is right, and mobile handsets are as necessary as a loaf of bread or bowl of rice, that should put Nokia among these traditionally recession-proof stocks that rely on the fact that people will go on buying household goods, energy and drugs, however cash-strapped they may be.

Ye of little faith

So, if one is to read the Global 30 as a forward looking indicator, the interpretation goes something like this: we are halfway through, maybe more, a financial crisis, with a few big names still likely to come up with some nasty surprises.

But nothing really ghastly; a global recession seems unlikely and defensive stocks are for wimps; inflation isn't going away, and you'd be a fool not to jump on board the shares that are going to ride the inflationary gravy train.

That's what the markets seem to be saying, but whether you trust the markets - that's up to you.