Equity markets have seen heightened volatility this year. While the year started off well, the markets have pared their 2018 gains in the carnage seen in recent weeks.
Recently, President Donald Trump targeted almost $60 billion worth of Chinese goods for possible tariffs. Prior to that, the president imposed duties of 25% on steel imports and 10% on aluminum imports, acting on the Commerce Department’s Section 232 probe. Although he has since watered down the Section 232 tariffs by exempting several countries, the markets seem concerned over a potential trade war between the United States and China.
Copper, which is seen as a leading indicator of global economic activity by some analysts, has also pared down its 2018 gains. Lower copper prices have also affected copper miners’ price actions.
Based on its March 27, 2018, closing price, Freeport-McMoRan (FCX) has fallen 9.0% YTD (year-to-date). BHP Billiton (BHP) and Rio Tinto (RIO) have fallen 4.1% and 4.2%, respectively, over the same period. First Quantum Minerals (FM) and Southern Copper (SCCO) have risen 1.8% and 12.5%, respectively, YTD.
Prior to 2018, copper was flying high after bottoming out in 1Q16. A favorable demand-supply environment, a weaker US dollar, and stable economic activity in China supported copper prices last year.
In this series, we’ll see how analysts are rating copper miners amid sagging commodity prices. We’ll also see how analysts have changed their ratings recently. Let’s begin by looking at copper’s recent price movements in the next article.