Today's Market View - Miner show resilience to sell-off in US equities

London (Oct 26)  Base Metals held firm overnight following the sell-off in US equities while gold continued to improve in an increasingly volatile environment

• Major mining equities are quick to rally as investors move to increase weightings in US-dollar earning stocks.

• Metals in general stood firm as nervous investors adjust equity weightings to a more risk off strategy.

• Investors and traders often sell metals defensively as they unwind any leveraged or extended positions and consumers hold back on purchases hoping for lower prices.

• But the potential for shortages to develop across a range of metals appears to be holding the market firm with premiums reported to be rising in the tighter metals.

• US equities are reacting to evidence of some slowing of the US new-build housing market which is reacting to higher US interest rates. The slowdown here is also seen as symptomatic and a cause of slower growth in other areas of the economy.

• Markets are also worried about:  ◦ Pipe bombs sent to US politicians on both sides. Seems someone just does not like politicians of any colour.

◦ The ECB's refusal to approve the Italian budget which could lead to an Ita-exit.

◦ The Saudi situation

◦ Stronger US dollar

◦ ECB potential to end QE in meeting on Thursday

◦ US GDP may have slowed in Q3.

• It looks as if markets feel they have had all the positive news flow and it’s all downhill from here

ProActiveInvestors