In today’s briefing:
- S&P/ASX Index Rebalance (Sep 2024): Two Big Surprises; Positioning Is Mixed
- Copper: Holding Its Ground, Value Emerging In Equities
- Iron Ore Tracker (9-Sep-2024): Short-Term Bearish Signals More Prominent
S&P/ASX Index Rebalance (Sep 2024): Two Big Surprises; Positioning Is Mixed
- There are 2 changes for the S&P/ASX100 Index, 3 changes for the S&P/ASX 200 (AS51 INDEX) and 16 adds/ 8 deletes for the S&P/ASX300 Index.
- The two big surprises are the inclusion of Guzman Y Gomez (GYG AU) and Yancoal Australia (YAL AU) in the S&P/ASX 200 (AS51 INDEX) and S&P/ASX300 Index.
- The adds to the indices have outperformed the deletes over the last few months and there could be profit-taking in the next few days.
Copper: Holding Its Ground, Value Emerging In Equities
- Concerns about a further slowdown in the Chinese and US economies have led to the commodity complex selling off, but copper remains resilient at the 9000 USD/ton level.
- Copper inventories on the exchanges have declined by over 6% in the last three weeks, although they remain elevated at over 470k tons.
- We see pockets of value emerging in equities post the sell-off but would only trigger stocks like Southern Copper (SCCO US) and Ivanhoe Mines (IVN CN) at lower levels.
Iron Ore Tracker (9-Sep-2024): Short-Term Bearish Signals More Prominent
- Iron ore broke out of its three-year band two weeks ago and, after a brief recovery, trended lower by 9% WoW. It is now within touching distance of 90 USD/ton.
- Chinese steel margins showed no signs of improving, with the average mills losing 70-80 USD/ton. Iron ore inventories continued to climb at the ports, exceeding 150 million tons.
- We would stay clear of iron ore names for the time being as we wait for iron ore to consolidate at some levels.
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