What Factors Influenced Freeport-McMoRan’s 2016 Price Action?



Freeport-McMoRan’s 2016 price action

As noted in the previous part, Freeport-McMoRan (FCX) made a closing high of $14 on April 29, 2016. However, the mining sector witnessed selling pressure in May. Freeport and Teck Resources (TCK) fell more than 20% in May.

Southern Copper (SCCO) and Turquoise Hill Resources (TRQ) (RIO) also saw downward price action of 12% and 3.4%, respectively, in May. The economic data points from China, the largest consumer of most commodities, disappointed the markets in May.

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Brexit impact

June 2016 turned out to be another sour month for investors in the metals and mining space. The Brexit vote created a financial tsunami on June 24, drowning all risk assets.

Freeport-McMoRan (FCX) closed at $10.58 on June 24, losing more than 10% from its previous day’s close. However, Freeport and other miners soon recouped their post-Brexit losses.

2H16 price action

The first half of 2016 went well for Freeport-McMoRan (FCX) as it rose 65% in 1H16. However, in 3Q16, Freeport largely traded sideways, falling 2.5% during the quarter.

On September 12, Freeport announced the sale of its Deepwater Gulf of Mexico (or GOM) energy assets to Anadarko Petroleum (APC) for a cash consideration of $2 billion. However, the energy asset sales didn’t find favor with investors, and Freeport saw sharp negative price action after the announcement.

By 3Q16, Freeport-McMoRan’s (FCX) asset sales were already baked into its stock price, and sagging copper prices had started to weigh on its stock. However, things started to change in November after Donald Trump’s election. We’ll discuss this more in the next article.


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