Miners Rally for Second Consecutive Day Post Trump Win

By Alex MacDonald

LONDON--Shares in mining and metals companies rallied Thursday, buoyed by a rise in commodity prices, particularly copper and iron ore, as investors continued to digest the consequences of businessman Donald Trump's U.S. presidential election victory.

In London, Chilean copper producer Antofagasta was the biggest gainer out the U.K.'s blue-chip FTSE 100 index, rising 14% to 728.5 pence a share while Swiss miner Glencore PLC (GLEN.LN), one of the world's top three copper miners, was up 5.6%.

Shares in mining companies rose for the second consecutive day following Mr. Trump's unexpected win on Tuesday, with the FTSE 350 mining index climbing 3.1% compared to a 0.3% decline in the FTSE 100 index. Mr. Trump's win helped push commodity prices higher, buoyed by expectations the U.S. will spend more on infrastructure.

Copper, a bell-weather for global industrial activities due to its use in skyscrapers, transmission lines and air conditioners among other things, was up 2.9% on Thursday, outperforming all major metals including gold. The red metal reached its highest level since July 2015.

"The Trump victory is seen as good for U.S. infrastructure development following pledges for new roads and bridges," said brokerage firm SP Angel in a note Thursday. "Copper which had been strangely subdued through much of the year due to new production coming through from Peru and Indonesia finally gained its legs," the brokerage firm added.

India-focused Vedanta Resources PLC (VED.LN) was also up 14% following better-than-expected earnings and a return to paying dividends.

"Copper demand seems to be strong in China and hopefully with president-elect Trump, [increased infrastructure spending] in the U.S. will see copper demand improving in the U.S," said Vedanta's Chief Executive Tom Albanese.

"He will focus on building, he will focus on infrastructure, my read is that is what" the market is focusing on, Mr. Albanese added.

Shares in steelmakers were also up.

Luxembourg-based ArcelorMittal, the world's largest steelmaker, saw its shares rise 14% over a two-day period and after a profit warning on Monday, which caused its shares to fall.

"Mr. Trump aims to boost infrastructure spending and tighten trade protection, further supporting the local steel sector on both the supply and the demand side," said Barclays analyst in a note.

But "What proportion of the promised infrastructure investment materializes and when it materializes remain to be seen," Barclays cautioned.

Meanwhile the spot price for iron ore, a key steelmaking ingredient, rose 4.5% on Thursday to a reach a near two-year high of $74.2 a ton. The rise defied analysts' expectations for iron ore to fall this yea as miners cut back supply by more than expected and Chinese steel demand began to grow rather than shrink this year.

The price rise may crimp steelmakers' profit margins in the near-term but should result in higher steel prices in the future as steelmakers pass on the costs to their customers.

-Write to Alex MacDonald at [e-mail]

(END) Dow Jones Newswires

November 10, 2016 09:10 ET (14:10 GMT)

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