Breakaway Research recently launched a new paid subscription product in February - The Breakaway Mining Research Daily and Weekly Reports.
We have summarised the daily market commentary from the Breakaway Mining Research Daily Reports from the 13th to the 17th March 2017.
If you would like more up to date commentary, including a more extensive Economic Outlook of the past week, along with our Breakaway Mining
Research sample Low Risk and Speculative Portfolios, as well as our Watchlist, you will need to subscribe.
HOW TO SUBSCRIBE
Subscriptions start at AUD$25 per month or AUD$250 per year.
Archived Market Commentary - don't forget to subscribe for up to date, daily commentary!
Friday, 17th March 2017
The major stock market indexes may be falling, but the broader market of stocks is actually rising. The number of advancing stocks is outnumbering decliners by a 1,615-to-1,325 score on the NYSE, and by a 1,541-to-1,143 margin on the Nasdaq exchange according to MarketWatch.com.
Macquarie report that with the potential disruptions at Cerro Verde, the top three copper mines in the world are now either fully or partially down. While Grasberg is meeting expectations (that is to say still unable to export and with no resolution in sight) the bank’s outlook on the Escondida’s strike length has now been surpassed, and the Cerro Verde action was unexpected since there were no labour contract deadlines coming up. The total impact is 256kt of disrupted copper production or ~6.4% annualised.
Thursday,16th March 2017
As expected, the US Federal Reserve raised rates by 0.25% raising the Fed funds target rate to a range of 0.75 to 1%. The relief that the increase was not 0.5% which was being factored into some parts of the market as well Chair Janet Yellen's less hawkish than anticipated comments about plans for future "gradual" interest rate increases pushed DJIA higher. The Chair’s dovish tone included saying at the start of her press conference that the rate hike did not signal a reassessment of the current economic outlook. She noted that the central bank has seen “solid progress,” made in the labor market.
The US dollar fell and gold found momentum as investors felt more confident that that Fed is not going to increase rates rapidly this year. Analysts note that even with the three rate hikes priced in this year, real interest rates are still expected to be negative, which is positive for the gold in the long run.
Base metals gain helped by the slight decline in the US$ index and news over the progress of negotiations at strike hit operations. A strike at Cerro Verde, the Peru’s largest copper mine operations at around 500ktpa, which began Friday last week has been declared illegal. With more than 1,300 union members out on strike the mine may only be run at around 15% of its normal capacity.
Wednesday, 15th March 2017
DJIA was lower with oil prices falling to their lowest level since November.
European markets also fell, amid political uncertainty as investors await the outcome of the Dutch being held today
Gold prices are relatively mute today ahead of a number of central bank meetings scheduled for this week
Economic data released by China indicated sustained growth momentum in the first two months of the year. Both industrial production and fixed asset investment (FAI) climbed through Jan-Feb and came in ahead of expectations. Industrial Production (%yoy, YTD) was 6.6 v 6.0 in Jan and a forecast 6.2.
Tuesday, 14th March 2017
Bloomberg reports that overnight, treasuries fell, pushing yields toward the highest level of the year, as investors anticipate a near-certain rate hike from the Federal Reserve on Wednesday. Stocks and the dollar traded in tight ranges ahead of a week packed with crucial central bank meetings, economic data releases and political risks.
Base metal prices were generally higher including nickel as Philippines President Duterte underlined his support for embattled environment minister Lopez and said she could do “what is necessary” with regard to her proposed mine closures.
If you missed it, Elon Musk has offered to fix Australian power network problems in 100 days. He reckons Tesla could install 100-300MW of battery storage in 100 days and if the scintillation is not ready within 100 days of signature then the facility will be for free. A tweet associated with the story quotes a price of $250/kWH for 100MWh+ systems.
Monday, 13th March 2017
Major indices up slightly on Friday.
The Wall Street Journal reports that traders are bracing for an eventful week, as an expected Federal Reserve rate increase, Dutch elections and a potential step by the U.K. toward exiting the European Union play out amid markets that appear vulnerable to sudden reversals.
Mixed with precious and bulk commodities down. Nickel has been the big loser with prices continuing to fall on Friday and continue its recent run. Macquarie reports that prices fell on fears that nickel ore exports to China from both Indonesia and the Philippines could be larger than previously thought. News from the Philippines that the Mines Minister, Gina Lopez, is likely to stay in her job for some time, thereby keeping mine production lower than last year, failed to deter short sellers.
Of more concern to investors was the news that the Indonesian producer, PT Antam, has applied for an export licence for 6mtpa of nickel ore (equal to around 58ktpa of recoverable nickel). This based on bringing forward its future anticipated capacity and which if allowed, could encourage other companies to do the same and leading to a deluge of ore exports.