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We might still be struggling to get much higher than 8,600pts on the XJO, but at least it’s Australia and there’s always Materials. The local bourse was basically flat heading into the final hour of trade up +0.07% as at 3.25pm AEDT. The intraday chart speaks for itself:
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As I discussed with HotCopper Editor Isaac McIntyre on today’s HotCopper Wire podcast (episode 34!), it’s improbable that we’re going to see much more excitement through December as the hotter-than-expected recent Australian CPI read proved to be a real wet blanket when it dropped four weeks ago; though, a Fed cut in December could maybe cause a mini-rally.
But right now it looks like not much is going to swing the needle too heavily in the upward direction down under until, perhaps, more market participants come back around February or March once the new year settles in.
That’s especially true as bond yields climb in Australia given the RBA isn’t expected to cut anytime soon, and in fact, could even hike rates – not what you want to hear unless you’re making money off interest, or you just particularly hate mortgageowners.
Anyway, let’s talk what’s good about the share market right now.
And the answer is metals: gold, silver, and especially copper, all remain at record levels; and when it comes to gold and copper at least, Australian has a few majors to choose from – as well as mid-caps, and of course, explorers. Stock picking then gets a little easier, at least.
We’ve been talking a lot about gold and silver lately so let’s turn to the orange metal copper (or red metal, depending on how you see the world.) While using a 10Y chart may or may not be unfair, the below graph gives a broader view of how important copper is becoming to the world economy, as decided by where the market places its value.
My big takeaways here? The value of copper, over the last decade, has been reliably increasing with the human population, which crossed eight billion in the last few years.
Add in COVID-era supply issues, market re-rates and the like, and you’ve got a fuller picture – but the real fundamental driver of copper prices is, in the long run, a growing human population. Which means more demand for electricity, which copper is predominately used to transport around.
I know, I know: electricity doesn’t actually flow ‘through’ wires, rather around them (or something,) but that’s a whole different discussion. Plus, sparky nerds tend to be fatally pedantic.
In the context of Australia being a fairly substantial copper producer itself – case in point, we boast BHP, one of the larger players in the game – it’s no wonder shares in the miners surged on Thursday with Materials leading the sectors. Sandfire also saw shares pop, one of the more promising ASX-listed copper players.
And of course, gold and silver speccies remain popular, too. I think I’ll leave it here for today and omit a company-by-company breakdown, because to be completely honest with you, I found the Thursday session to be a bit unexciting.
But there’s still Friday tomorrow, which raises the question: will we see profit takers scalp gains, or, lay the foundations for a leg-up through Week 50?
(By the way, next week is Week 50 of the year.)
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