Mining Shares Rally on Optimism BOJ’s Policy Will Support Growth

BOJ Shifts Policy Framework: What Does It Mean?
  • Chinese stimulus projects also seen lifting demand for metals
  • Rio Tinto comments another factor supporting markets: SP Angel

Mining stocks rallied with global equities amid optimism that changes in the Bank of Japan’s monetary policy will boost growth, helping improve the outlook for raw materials.

The BOJ shifted its focus of monetary stimulus Wednesday from expanding the money supply to controlling interest rates, while keeping asset purchases at about 80 trillion yen ($795 billion) annually over the long term. China’s Ministry of Finance has selected about 1 trillion yuan ($150 billion) worth of additional projects funded through public-private partnerships, according to people familiar with the matter.

“Japan’s new quantitative and qualitative easing program is lifting markets today,” SP Angel Corporate Finance LLP analysts including John Meyer, said in a note. “News of new Chinese stimulus for a large number of new projects is also seen as lifting demand for metals and related commodities. Rio Tinto CEO comments on firm demand for commodities following a recent two week trip to China is also supporting markets.”

On Monday, Rio Tinto Group, the world’s second-largest mining company, said it’s becoming more “cautiously optimistic” about the outlook in China, the largest consumer of metals.

A gauge of 18 large global base-metal producers tracked by Bloomberg Intelligence advanced 1 percent, taking this quarter’s gains to 11 percent.

In other metals news:

  • Nickel rose for a fourth straight session in London after the Philippine Environment Secretary Gina Lopez said the government will shut more than 10 more mines in addition to 10 halts already ordered. Kenny Ives, Glencore’s head of nickel, said he expects prices to climb through 2018 as demand outstrips supply.
  • Aluminum also rose on the London Metal Exchange, while copper, zinc, lead and tin declined.
  • On the Comex in New York, copper futures slipped.
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