Key Factors That Impacted Freeport-McMoRan’s 3Q16 Price Movement



Freeport-McMoRan’s 3Q16 price movement

Previously in this series, we noted that Freeport-McMoRan (FCX) lost 2.5% in 3Q16. In this article, we’ll look at the factors that impacted the stock’s 3Q16 price movement.

Article continues below advertisement

Strong July

The third quarter of 2106 began on a weak note. Freeport-McMoRan (FCX) fell 7.5% on July 5 as crude oil prices slipped 5%, triggering a sell-off in global markets. FCX touched its July closing low of $10.50 on July 5. The stock touched the month’s closing high of $13.14 on July 18. Overall, July was a good month for Freeport-McMoRan, and the stock gained 16% during the month.

Copper prices were also strong in July and the LME (London Metal Exchange) three-month copper contract averaged $4,872 per metric ton during the month.

Weak August

Freeport-McMoRan (FCX)  largely traded sideways in the beginning of August, hovering around the $12 price level. However, the stock saw weakness toward the end of the month as FCX touched its month’s closing low of $10.29 on August 31.

Notably, August was a weak month for the mining industry as a whole. The SPDR S&P Metals and Mining ETF (XME) and the Materials Select Sector SPDR ETF (XLB) lost 11.1% and 0.27%, respectively, during the month.

Copper, which some market participants see as an indicator of global economic activity, shed 5.1% in August. Freeport-McMoRan saw downward price action of more than 20% in August. Southern Copper (SCCO) was almost flat, and Turquoise Hill Resources (TRQ) fell 13.5%. However, Teck Resources (TCK) continued its upward momentum in August and gained ~2%.

Despite the weakness in commodity prices, Freeport-McMoRan maintained its $10 price level in July and August. FCX’s price action in July and August was mainly driven by the fluctuations in commodity prices.

However, September saw some company-specific news that pushed the stock below the $10 level. We’ll discuss this more in the next article.


More From Market Realist