U.S. Steel gains on record Q2 results; Newmont slides as rising costs hurt earnings


The materials sector edged higher this week, with S&P 500 Materials index and Materials Select Sector SPDR (XLB) both up 4%.

Below is a chart comparing material sectors’ YTD performance against the S&P 500:

Iron ore futures surged over 7% in China on Monday, according to Reuters, extending a previous rally sparked by hopes of an economic rebound in top steel producer China. The most-traded iron ore for September delivery (SCO:COM) on China’s Dalian Commodity Exchange ended daytime trading +7.1% at 711 yuan/metric ton ($105.27) after earlier reaching 723.50 yuan, its best level since July 14.

Copper futures rose to their highest in two weeks on Tuesday on optimism over new infrastructure projects in top metals consumer China. On Friday, LME 3-month copper (HG1:COM) grew 0.6% at $7,808/ton, reaching its highest since July 8. Other LME metals such as zinc, lead and nickel registered modest gains.

Gold prices rose 1% on Thursday after data showed an unexpected contraction in U.S. economy during the second quarter that helped boost the metal’s safe-haven allure. Spot gold (XAUUSD:CUR) settled at $1,768.57/oz on Friday, registering a 2.4% gain for the week. Last week, gold hit a near 16-month low after diving down to $1,680/oz. SA contributor Florian Grummes sees an imminent summer rally in the gold market, learn why.

Lumber prices (LB1:COM) fell 7% to $531.90 per thousand board feet on Tuesday as new housing data showed 8% decline in new home sales in June, marking the the lowest monthly sales since April 2020. Price settled at $527.10 per thousand board feet on Friday, down ~8% for the week.

Take a look at this week’s top gainers and losers among basic material stocks ($2B market cap or more):

U.S. Steel (X) took the top gainer spot with a 17.96% growth. Stock surged on the firm’s record Q2 results and $500M share repurchase plan.

Hecla Mining (HL) +17.66%; Sigma Lithium (SGML) +15.90%; First Majestic Silver (AG) +15.71%; and Steel Dynamics (STLD) +13.25% rounded out the gainers list.

The week’s top decliners among basic material stocks ($2B market cap or more) were:

Newmont (NEM) became the top decliner, sliding -8.78% in the week. Stock plunged on weaker than expected Q2 earnings and reduced gold production forecast for the full year.

Avantor (AVTR) -6.27%; Sherwin-Williams (SHW) -6.13%; Tronox (TROX) -5.39%; West Fraser Timber (WFG) -5.18% rounded out the losers list.

Other materials ETFs to watch: iShares Global Timber & Forestry ETF (WOOD), Materials Select Sector SPDR ETF, Vanguard Materials ETF (VAW), iShares Global Materials ETF (MXI), SPDR S&P Metals and Mining ETF (XME), VanEck Vectors Gold Miners ETF (GDX), iShares MSCI Global Gold Miners ETF (RING), Global X Copper Miners ETF (COPX).

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