What Could Drive Alcoa Stock after the Split and the Election?



US presidential election

As the shock over Donald Trump winning the US presidential election slowly subsided, the market’s attention shifted to some other upcoming events. OPEC’s (Organization of the Petroleum Exporting Countries) annual meeting will be held in Vienna on November 30, 2016.

Its Algeria meeting in September raised hopes of a production cut deal. The meeting boosted market sentiments, and we saw a rise in risk assets. OPEC’s November meeting will likely bring more clarity to how individual OPEC countries plan to make production cuts.

The possibility of a December interest rate hike is also building, according to recent statements from Fed chair Janet Yellen. After the post-election market rally, the key near-term market drivers could be the OPEC meeting and the Fed’s action.

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On November 1, 2016, Alcoa split into two new entities: Alcoa (AA) and Arconic (ARNC). The above graph shows the timeline of the Alcoa split.

The split completed the process that was initiated by the company in September 2015. While Alcoa has seen a decent upward price action, Arconic has been on a losing spree since the listing. You can read Has Alcoa’s Split Lived Up to the Hype? to find out more about the split.

Series overview

Alcoa’s split and Trump’s election have been the key drivers of Alcoa’s November price action. Trump’s win helped fuel a rally in metals and mining stock, including Rio Tinto (RIO) and Century Aluminum (CENX).

Since Alcoa is a pure-play commodity producer, its fortunes are closely tied to commodity prices (DBC). In this series, we’ll look at commodity prices as well as demand-supply trends in the global markets. That should help us understand what could drive Alcoa stock in the coming months.

Let’s begin by looking at the recent trend in aluminum prices.


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