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Miners Approach 52-Week Lows as Trade War Heat Intensifies

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May. 23 2019, Published 1:01 p.m. ET

Miners’ returns today

US equity markets are in the red today amid the escalation in the US-China trade war. Metals and mining stocks have especially come under pressure, and the SPDR S&P Metals and Mining ETF (XME) is down 1.7% as of 11:15 AM EDT.

While Alcoa (AA) has made a fresh 52-week low today, Freeport-McMoRan (FCX) has narrowly escaped its 52-week low.

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Copper prices

While there’s been a broad-based sell-off, metals and mining stocks especially have come under pressure this month. China is the biggest consumer of metals, from aluminum to copper. Metals were subdued in 2018 as well amid concerns about China’s economic slowdown. Copper prices, which are seen as a barometer of global economic activity, plunged below $6,000 per metric ton last year as the Chinese economy looked set for a hard landing.

This year, we’ve seen a considerable improvement in the economic data from China. Over the last year, China has taken a series of incremental steps to halt its slowdown, and its actions have started to bear fruit. However, the escalation in the US-China trade war has put a question mark on China’s fragile economic recovery.

Metals prices

Metals prices have come under pressure this month, and copper has again fallen below $6,000 per metric ton. As things stand currently, both the United States and China have hardened their stances and seem to be preparing themselves for a long-term trade spat. From the market’s perspective, the trade conflict between the world’s two biggest economies is leading to uncertainty. Metals have been especially in the line of fire as China and the United States continue to raise the stakes.

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