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Basic Materials Roundup: Market Talk

3 Feb 2018 9:20 am

The latest Market Talks covering Basic Materials. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.

2347 GMT [Dow Jones] Lumber futures zig-zagged this week, with analysts saying that some speculative traders were getting cold feet. Prices tumbled on Monday and Tuesday, only to regain some of those losses later in the week. The cash market for physical lumber continued its counter-seasonal march higher regardless. An ongoing supply pinch forced customers to pay mills more for their timber, even if the winter weather dampened construction activity. CME March lumber futures rose 1.8% to $483.70 per 1,000 board feet, slightly lower for the week. (benjamin.parkin@wsj.com; @b_parkyn)

1747 GMT - The Bel-20 closes 1.2% lower at 4053.59 on Friday, with European markets slumping amid a global selloff as investors bet central banks may need to raise rates to combat inflation. Brussels-based materials-technology company Umicore was the benchmark's worst performer with a 4.1% drop, followed by a 2.8% decline in the stock of steelmaker Aperam SA. Four companies bucked the downturn, led by Belgian manufacturer Ontex Group NV's 1.2% rise and a 0.9% gain in the shares pharmaceutical research firm Galapagos NV. (emre.peker@wsj.com)

1446 GMT - A recent rise in energy prices is becoming more of a concern for mining companies. Southern Copper notes in its earnings release that it was able to reduce costs despite a roughly 20% increase in diesel prices in 2017, striking a similar tone to Freeport-McMoRan, which reported earnings last week. "We are seeing some cost inflation," Freeport Chief Financial Officer Kathleen Quirk said on the firm's earnings call. Higher energy prices can crimp miners' profits because they use huge amounts of energy to extract and refine raw materials. Although higher oil prices benefit copper miners because many investors trade the commodities together in a single bucket, the higher costs will likely continue to be in focus if the energy rally continues this year. (amrith.ramkumar@wsj.com; @AmrithRamkumar)

1428 GMT - Southern Copper reports better-than-expected 4Q sales and a 33% increase from a year earlier, though a $743.3M tax charge weighed on profits. The copper miner says it expects to complete its Toquepala project in Peru this year, which should increase production. The results come after the firm, which has benefited from a recent surge in copper prices, announced a quarterly dividend of 30 cents a share last week. Citi analysts say in that Southern Copper operates the best assets in the sector but there are question markets around its growth after the Toquepala expansion is completed. Southern Copper's earnings call is scheduled for Tuesday. Shares, up about 35% since the start of July, are down 4.5% with copper prices down 1%. (amrith.ramkumar@wsj.com; @AmrithRamkumar)

1428 GMT - Assets from US stocks to Treasurys to gold are coming under pressure following a jobs report that has reignited some analysts' fears of a pickup in inflation. The Dow Jones Industrial Average headed for its worst week in more than two years, recently shedding 295 points, or 1.1%. Assets that investors typically scoop up when they are shying away from risk are also retreating: gold contracts fell 1.2%, the Japanese yen lost 0.9% against the dollar and the yield on the 10-year Treasury note rose to 2.841%, near its highest level in four years. "Investors who've thought the [stock] rally has been based on low rates could be getting worried about them moving higher faster than they expected," said R.J. Grant, director of equity trading at KBW. (akane.otani@wsj.com)

1258 GMT - Gold prices are falling after the January jobs report showed the US economy added 200,000 jobs in January, more than analysts projected, and that wage growth picked up. Friday's report could add to investor expectations that the Federal Reserve will continue to raise interest rates at least three times this year, weighing on assets like gold that struggle to compete with yield-bearing assets as borrowing costs rise. Gold futures are now down 0.5% compared to up less than 0.1% before the report. Prices have fallen slightly since hitting their highest level since August 2016 last week, as the dollar has stabilized. A stronger dollar makes gold more expensive for overseas buyers. The WSJ Dollar Index is up 0.6% Friday. (amrith.ramkumar@wsj.com; @AmrithRamkumar)

(END) Dow Jones Newswires

February 03, 2018 04:20 ET (09:20 GMT)

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