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DJ Basic Materials Roundup: Market Talk

· 02/05/2021 12:20

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

1154 ET - Hochschild Mining's earnings benefited from stronger production in the fourth quarter at its Inmaculada mine, making up for weaker results at other mines, Peel Hunt says. The miner's throughput at the Argentinian mine topped 340,854 metric tons of ore, up from 327,906 tons in the prior year period, producing 43,550 ounces of gold. "This was mostly offset by a weaker result at San Jose in Argentina, but still led to a small net positive to our numbers," the brokerage says. Peel Hunt says it continues to see substantial potential upside and maintains a buy rating on the stock with a target price of 315 pence. (adriano.marchese@wsj.com)

0545 ET - Anglo American stands out from its mining peers owing its exposure to platinum group metals and diamonds, which is attractive in the near term and offers more compelling growth, Berenberg says. The bank says it sees Anglo American as a defensive pick versus Rio Tinto and BHP, but that it prefers Rio Tinto over BHP in the near term on dividend upside. Berenberg initiates Anglo American with a buy recommendation and target price of 2,000 pence, while Rio Tinto and BHP are both placed at hold, with target prices of 6,000 pence and 2,000 pence, respectively. (sabela.ojea@wsj.com; @sabelaojeaguix)

0536 ET - Johnson Matthey could face increased Chinese competition in the expanding electric-vehicle battery market, says Barclays, cutting its recommendation to underweight from equalweight and its price target to 2570 pence from 2640p. Barclays says Chinese battery producers are likely to benefit as key patents for lithium ferro-phosphate battery technology expire in the next year, allowing them to more easily export LFP batteries as well as produce them for domestic Chinese customers. "This expansion could shrink total addressable market estimates for producers of high-nickel cathodes like Johnson Matthey," Barclays analysts say. "In time, we expect high-nickel pricing in Europe to come under pressure too. JM looks most levered to this risk, with valuation close to peak." Shares fall 2.6% to 2932p. (philip.waller@wsj.com)

0433 ET - Gold rises but is still on course for its worst week since the start of the year, as U.S. Treasury yields climb. Comex futures are up 0.9% at $1,807.50 a troy ounce, but the metal slumped below $1,800 an ounce on Thursday for the first time since November. Hopes for U.S. stimulus measures helped Treasury yields firm, weakening the appeal of gold as a haven asset. "The prospect of a juicy wave of government spending and borrowing sent longer yields higher," says Jeffrey Halley, market analyst at Oanda. "The risks are skewed towards more downside pain for a structurally long gold market as the weekend approaches," he says, adding that U.S. jobs data due out later Friday would be key. (william.horner@wsj.com)

2227 ET - Petronas Chemicals Group could be a key beneficiary of stronger fertilizer demand, Citi says. It upgrades the stock to buy from sell and lifts its target price to MYR8.50 from MYR6.80, also citing faster earnings growth and rising urea prices. Urea is a white crystalline solid material often used in fertilizers. Citi forecasts the Ebitda of Petronas Chemicals' fertilizer-and-methanol segment to rise 40% in 2021, as it raises the 2021-2022 EPS estimates for the company by 23%-24% to reflect higher crude-oil prices. Shares rise 2.9% to MYR7.42. (yiwei.wong@wsj.com)

2211 ET - China's restrictions on Australia's thermal coal may last longer than the curbs on its coking coal because Australian thermal coal is relatively easy to replace in the broader market, says CBA. "The same is not true for Australia's coking coal," it says. Australia is the world's No. 1 producer of coking coal, which is used to make steel. Russia and Indonesia have in the meantime stepped up to meet China's thermal-coal needs after Beijing halted Australian cargoes, the bank notes. "China's deal with Indonesia for $1.46 billion of thermal coal over the next three years also signals China's intent to solidify its relationship with Indonesia," CBA says. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

2049 ET - Many investors would be anticipating a bounce in gold and silver after recent steep falls, including a 2% dive for both precious metals in the U.S. on Thursday, HSBC says. A lot will depend, however, on the greenback and how it and U.S. Treasury yields are affected by nonfarm payrolls. "Gold and silver may bounce but we suspect gains may be limited as bulls have been dealt losses and the steep yield curve can work against gold," HSBC says. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

(END) Dow Jones Newswires

February 05, 2021 12:20 ET (17:20 GMT)

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