10 September 2018
Where are we in the Cycle?
Several years of global metal demand weakness have been offset in the
latest cycle by unusually prolonged supply side constraints. Weak
productivity outcomes among advanced economies and structural impediments
among a large number of developing economies are now evident headwinds to
the advancement of an already mature metal price cycle, with a rising
probability that peak metal prices for the latest cycle were recorded in
February 2018.
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Market Directions
Signs of momentum loss in industrial metal prices, evident since the
first weeks of 2018, have been aggravated by US trade policies and worrying
signs of developing economies suffering the consequences of currency
losses. The largest stocks in the sector have given up all their gains from
the past year. Metal related equity prices, in Australian dollars, have
benefitted from the decline in the Australian dollar which has been caught
up in the flight from developing country currencies.
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Portfolio Performance and Positioning
With sector losses accelerating in the past week, declines among
portfolio stocks significantly exceeded the number of advancing stock
prices. Advancing stocks were evenly split with declining stocks in the
Phase I stock segment where broader equity market conditions were less
influential. The macro portfolio remains tilted toward advanced exploration
efforts. No portfolio adjustments were made.
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Stock Reviews and Rating Analysis
PortfolioDirect rating reports analyse the quality and risk
attributes of proposed mineral developments. Rating criteria apply to mining and oil and gas stocks at any stage of
development. PortfolioDirect uses a five point rating
scale to measure the risk adjusted quality of proposed mineral developments
or companies.
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The 'Steak or Sizzle' blog provides summary judgements on
the top performing ASX-listed resources stocks.
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