Miners, metals rally as global manufacturing recovery picks up pace
Europe's industrial activity climbs to more than two-year high, US recovery gathers steam and China serves up huge surprise.
Beaten down mining and metals stocks enjoyed a broad rally on Thursday after much better than expected economic news from China and Europe.
China's flash manufacturing PMI index, rose for the first time in four months in August against all expectations. The index, which measures levels of economic activity among small and medium businesses, also jumped to above 50 – a reading that indicates expansion.
China dominates the global trade in just about every commodity including iron ore (representing more than 60% of world trade), copper (42%), coal (47%), nickel (36%), lead (44%) and zinc (41%), and the health of the world's second largest economy is crucial to mining stocks.
Also buoying the sector was rare good news from Europe, China's largest trading partner. The PMI of manufacturing in the euro area, led a by a robust Germany, rose to 51.7, a 26-month high.
The US followed suit with the PMI there rising to five months highs of 53.9, helped by a big jump in new orders and employment expanding at a faster rate.
Copper jumped to a day high of $3.37 on Thursday in New York futures dealings, adding 1.8% from yesterday's close and up 10% from near 3-year lows reached at the end of July.
Other metals are also enjoying a strong August, with LME nickel at $14,450 a tonne up just under 5% since the start of the month. Zinc has advanced 6.2% in August to levels around $2,220 a tonne, while lead at $1,936 has gained in equal measure.
Iron ore continued to defy predictions of a sharp correction in the price towards the end of the year with benchmark 62% fines at the Chinese port of Tianjin trading at $137.70 a tonne, off recent highs above $140, but well above year lows struck two months ago of $110.
The stronger metals prices fed through to mining stocks with the majors making strong gains without exception.
American depository receipts of the top three miners trading in New York built on gains in Europe and Australia with BHP Billiton (NYSE:BHP) jumping 2%, Brazil's Vale (NYSE:VALE) adding 4.5% and Rio Tinto (NYSE:RIO) climbing 2.6%.
Of the top diversified miners Glencore Xstrata (LON:GLEN) added 3% in London. Anglo American (LON:AAL) shares moved 2% for the better and the counter is now up 7% from a month ago. Canada's Teck Resources (TSX:TCK) was a major gainer adding more than 3%.
Copper giant Freeport-McMoRan (NYSE:FCX) jumped 3.6%, Southern Copper Corp (NYSE:SCCO) managed a more modest gain of 2.6% while fellow South American copper producer Antofagasta (LON:ANTO) increased 1%.
Major iron ore miners also fared well with South Africa's Kumba Iron Ore (NYSE:KIROY) up 2.6%. Fortescue Metals Group (ASX:FMG) of Australia and US-based Cliffs Natural Resources (NYSE:CLF) were the best performers off all the miners, soaring 7.3% and 6% respectively.
With the gold price hovering around $1,370 an ounce, gains by US-based gold-focused miners were more modest.
Newmont Mining Corp's shares traded up 1%, global number one Barrick Gold Corp jumped 2.4% adding to its strong recent run which has seen it added 12% over the past month.
Fellow Canadian gold counters Goldcorp (TSX:G) and Kinross Gold (TSX:K) both traded higher while AngloGold Ashanti (NYSE:AU) also eked out slight gains.