Join our daily newsletter At The Bell to receive exclusive market insights
BHP Ltd (ASX:BHP) is all the rage right now. After Commonwealth‘s historic -10% drop last week, the stock is once again the largest on the Australian stock market, and that’s because of its strategic pivot into being a copper major.
Listen to the HotCopper podcast for in-depth discussions and insights on all the biggest headlines from throughout the week. On Spotify, Apple, and more.
Copper has been tipped as the next big resources megatrend for the last few years now and if futures contracts are anything to go by, that’s definitely been a prescient call. While gold still struggles to breach US$4,600/oz in the face of high oil prices, and all other metals remain fairly mixed, copper continues to run hard.
Looking at copper futures on the LME and COMEX, as tracked by TradingEconomics, the chart for the metal is an obvious good news story. But on Friday, a mix of macroeconomic unease and profit taking converged to see copper prices fall around -5%.
That drop still keeps the price well above the psychological anchor point of US$6.00/lb. But with a red Monday tipped for the ASX200 to kick off Week 21 of the year, we’re to see a test for BHP Ltd today.
What BHP does on Monday then will be the first real example we get of how strongly the correlation between copper prices and BHP’s new valuation at and above A$60/sh will prove to exert force.
Both BHP and Rio Tinto have been beneficiaries of copper’s climb; both companies have done a lot of work to distance themselves from iron ore reliance in the last few years.
Pre-market on Monday, the BHP price was fetching A$60.46/sh, which is still a weekly gain of +4.3% and a YTD increase of over +30%, so anybody who’s been holding on for any length of time likely isn’t too stressed about the Friday sell-off.
On a 1Y basis, BHP’s share price has climbed over +50%.
While fluctuations in an underlying commodity price affecting a resource stock isn’t exactly new for anybody familiar with the ASX, it would be a paradigm shift on sorts in that BHP traders may need to start keeping an eye more closely on copper than that of iron ore and gold in the current moment.
And that current moment is one of excitement, and, some rather interesting propositions about BHP’s role in the global economy.
JP Morgan, Bank of America and Morgan Stanley have all taken an interest in BHP in recent weeks, with all three investment banks (or arms thereof) bullish on The Big Aussie.
But it’s a 53 page report from Morgan Stanley put out in the last week or so that really underscores the shift: because copper is used so heavily in data centres, now synonymous with AI, Morgan Stanley has described BHP as an AI-data-centre play.
Finally! We have a tech giant. It might not be making microchips, or running data centres, but BHP sure produces enough copper to be considered – quite seriously – as a major source of data centre capacity.
Y’know, if you squint. What a time to be alive. It looks like at least one Wall Street investment bank has gotten tired of the ASX lacking any real AI momentum, and it’s decided to create some itself.
(Truly, that’s probably a good thing.)
Join the discussion: See what’s trending right now on HotCopper, Australia’s largest stock forum, and be part of the conversations that move the markets.
The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions. For full disclaimer information, please click here.
