World’s Biggest Miners Soar as Metals Climb on Trump Victoryby
BHP, Rio have potential to continue gains: Tribeca’s Cleary
Trump’s infrastructure focus seen supporting commodities
The world’s biggest miners surged along with metals on expectations a Donald Trump presidency can deliver a major boost to U.S. infrastructure spending, bolstering the case for a global commodities markets rebound.
BHP Billiton Ltd., the top miner, climbed as much as 9.8 percent in Sydney, set for the largest gain in almost eight years, as Rio Tinto Group jumped as much as 9.4 percent and Fortescue Metals Group Ltd. gained 13 percent. The stocks reversed from losses Wednesday as investors focused on the potential positives of a Trump presidency and discounted the shock of his election and the uncertainty it will bring to U.S. policy.
Steel and building companies in Tokyo were also caught up in the wave of optimism, with Japan’s biggest mill, Nippon Steel & Sumitomo Metal Corp., and its largest mining and construction equipment maker, Komatsu Ltd., more than erasing Wednesday’s losses as Citigroup Inc. cited investment opportunities in infrastructure-related stocks. Nippon Steel rose as much as 9.3 percent and Komatsu by 12 percent, its biggest gain since 2008.
Trump has signaled spending of more than $500 billion to rebuild U.S. infrastructure with a pledge to at least double Hillary Clinton’s estimated $275 billion, five-year plan for roads, airports and bridges. Miners are set to benefit as the policy will increase demand for copper and other commodities at a time of tightening global supply, according to Jefferies Group LLC.
“There’s still upside. We have had a five-year period of getting costs out, most commodity markets are now in equilibrium and China is going to continue to stimulate,” said Ben Cleary, a Sydney-based portfolio manager for Tribeca Investment Partners Pty, which has assets of about A$2.5 billion ($1.9 billion) under management, including BHP, Rio and Fortescue shares. “It seems as though we are also going to get fiscal stimulus in the U.S. and a number of other G-20 countries, so certainly I’m very happy being long.”
Iron ore, the top earner for BHP and Rio, jumped 3.9 percent Wednesday to $70.98 a metric ton, the highest since January last year, while spot metallurgical coal topped $300 a ton this week for the first time since 2011. Copper on the London Metal Exchange surged 3.3 percent Thursday, after a similar gain the day before, and is up 19 percent for the year.
Melbourne-based BHP traded 8.5 percent higher at A$24.475 at 12:21 p.m. in Sydney, while London-based Rio rose 8.1 percent to A$58.10. Both producers could post gains of a further 20 percent to 30 percent from current prices, Tribeca’s Cleary said. “In my mind they have both got further to go,” he said.
Rio, with assets including the Bingham Canyon copper mine in the U.S., gets about 20 percent of its revenue in North America, according to data compiled by Bloomberg. BHP, with assets in the U.S. including oil and gas operations, takes about 15 percent of its revenue from North America, the data show.