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
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