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Freeport-McMoRan: Is the Trump Rally Over?

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Updated

Trump rally

Freeport-McMoRan (FCX) closed at $12.83 on March 23—0.23% lower than its closing the previous day. So far, 2017 has been a somber year for Freeport investors. The stock has lost 2.7% year-to-date. The stock has been sliding since January 24 when it made a closing high of $17.02.

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Copper prices

Currently, Freeport is trading at price levels similar to pre-election levels. President Trump’s election fuelled a rally in metal prices. As we all know, the rest is history. Copper broke the $5,000 per metric ton level after President Trump’s victory in the US presidential election. Copper producers, including Freeport-McMoRan and Southern Copper (SCCO), were trading in a narrow price channel before the election results. They rallied after the election results. The upward price action wasn’t limited to copper producers. We saw a broader rally in metal and mining shares (SPY) (SPX). Diversified miners like Rio Tinto (RIO) and BHP Billiton (BHP) also saw renewed buying interest after almost five years of depressed commodity prices.

The rally in mining stocks was famously termed the “Trump effect” by analysts. President Trump’s proposed infrastructure investments were expected to boost metal demand. Almost all of the metals from steel to copper rose.

Series overview

Freeport is back near its pre-election price levels. Is the Trump rally finally over? In this series, we’ll look at the different factors that are driving the recent downward correction in Freeport stock. We’ll look at the macro factors as well as company-specific issues that impacted Freeport’s recent price action.

Let’s start by looking at the recent trend in copper prices.

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