This week, the S&P 500 Materials (Sector) index saw a minor gain of +0.13%. However, the Materials Select Sector SPDR ETF (XLB) experienced a decline of 0.46%. Despite some bullish short-term signals, the larger S&P 500 (SP500) stock market index was weighed down by a slide in megacap stocks during the third quarter earnings season.
Copper prices (HG1:COM) rallied by +2.8% amid signs of recovery in China. The three-month copper performance in London was the strongest in over a month, driven by positive policy measures in China. However, the rally was partly offset by a stronger dollar and signals of a weak European economy.
Iron ore futures (SCO:COM) also rose around +3.9% as reports suggested that the Chinese government might issue additional sovereign debt to stimulate economic growth.
On the other hand, nickel prices experienced the largest weekly decline in a month due to a global surplus, resulting in a -2.4% drop in three-month prices on the LSE.
Meanwhile, gold (XAUUSD:CUR) made gains and is approaching its biggest monthly increase since March 2023. Precious metal prices have been boosted by safe-haven inflows amid the Israel-Hamas conflict.
Among basic material stocks (market cap of $2 billion or more), the top gainers this week include Sigma Lithium (SGML) with a +14.91% increase. Sigma Lithium has expanded its senior leadership team and prepared its third shipment of 20,000 tons of Triple Zero Green Lithium in Brazil. FMC (FMC) stabilized after a plunge and recorded a +13.42% gain following lower Q3 guidance and plans to restructure operations. Cleveland-Cliffs (CLF) saw an +11.08% increase in Q3 earnings with record steel shipments to the automotive industry. Vale (VALE) reported lower net earnings in Q3 but still performed ahead of analyst estimates. The company announced plans to distribute around $4 billion to shareholders through dividends and stock buybacks. Eldorado Gold (EGO) witnessed a +6.94% increase in Q3 bottom line, driven by stronger gold sales and higher gold prices.
On the downside, the top losers among basic material stocks included Avantor (AVTR) with a -12.43% decline in shares following the company’s Q3 earnings announcement. Olin (OLN) fell by -7.43% after J.P. Morgan lowered its price assumption for titanium dioxide. Teck Resources (TECK) continued its decline after revealing Q3 results and withdrawing a permit application for expanding its Chilean copper mine, resulting in a -7.38% drop. Posco Holdings (PKX) reported downbeat Q3 earnings, attributing them to weaker steel demand, lower product prices, and reduced shipments. The company’s shares fell by -7.12%. Sibanye Stillwater (SBSW) experienced a -5.50% decline after announcing ongoing restructuring efforts that may affect more than 4,000 employees and contractors.
Notable materials ETFs to watch include iShares Global Timber & Forestry ETF (WOOD), Materials Select Sector SPDR ETF, Vanguard Materials ETF (VAW), iShares Global Materials ETF (MXI), SPDR S&P Metals and Mining ETF (XME), VanEck Vectors Gold Miners ETF (GDX), iShares MSCI Global Gold Miners ETF (RING), and Global X Copper Miners ETF (COPX).
Read more on Sigma Lithium, Eldorado Gold, Olin, and Teck Resources:
Sigma Lithium: Green Energy Darling
Eldorado Gold: The Stock Is Attractive
Olin Is Likely A Value Trap
The Teck Resources Saga Continues: Deciphering The Company’s Next Move