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US stocks mostly flat: Global mining M&A set to reach highest level in decade

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2023-09-19

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US stocks have closed near the flat line Monday as investors geared up for the Federal Reserve’s meeting scheduled for later in the week.

The S&P 500 inched higher by 0.07 per cent to 4,453.53, while the Nasdaq Composite added 0.01 per cent to finish at 13,710.24. The Dow Jones Industrial Average advanced 6.06 points, or 0.02 per cent, to end at 34,624.30.

The Fed’s two-day policy meeting begins Tuesday. Traders are assigning a 99 per cent chance that the central bank stays put when it releases its rate decision on Wednesday, according to the CME Group’s FedWatch tool, which gauges pricing in the fed funds futures market. The central bank will also release its market forecasts on Wednesday.

There’s less agreement about what the Fed will do in November, with the market expecting an approximately 31 per cent probability of a hike. Goldman Sachs’ economists said over the weekend that an increase in November would be unlikely.

Apple climbed 1.7 per cent. Goldman Sachs and Morgan Stanley both gave optimistic outlooks for new iPhone demand. Meanwhile, Ford slid more than 2 per cent as the United Auto Workers’ strike continued. Stellantis and General Motors, the other automakers facing off with the union, each shed more than 1 per cent.

The S&P 500 and the Nasdaq both ended the previous trading week down, marking their second straight week of losses. The Dow finished the week 0.1 per cent higher.

In commodity-related news, global mining mergers and acquisitions are poised to reach their highest levels in a decade in 2023, with expectations of continued growth into 2024 and beyond.

This surge in M&A activity is primarily driven by the increasing demand for metals crucial to the green energy transition.

Fitch Ratings specifically highlights the heightened activity in critical metals such as lithium, nickel, and copper, where a structural supply deficit is anticipated beyond 2026. Despite market fluctuations, Fitch predicts that miners' financial stability will hold up well in the short to medium term, thanks to commodity prices remaining above typical mid-cycle levels.

WTI crude oil is close to $90 per barrel, driven by tight OPEC+ production and falling Cushing inventories. Citi analysts suggest a brief spike to over $100 due to technicals and geopolitics, but they deem it unsustainable, as non-OPEC+ production is expected to grow by 1.8M bpd in 2023 and 1M bpd in 2024.

Lastly, coffee prices have increased for the third consecutive day due to extreme heat in Brazil, which threatens the next coffee crop.

Additionally, the recent strength of the Brazilian currency has reduced the willingness of sellers to export.

The hot weather is causing concerns among market participants, as dry conditions persist, and rain is needed before October to ensure healthy fruit development. Arabica futures rose by up to 1.2 per cent in New York, while robusta saw a 2.1 per cent increase. The strengthening Brazilian real has also impacted the market, with the currency gaining ground against the dollar for the fourth consecutive day.

Turning to sectors, Energy was the best perfromer on the back of the rising oil prices. Tech was the worst performer.
 
Futures

The SPI futures are pointing to a 0.3 per cent fall.

Currency

One Australian dollar at 7:25 AM was buying 64.36 US cents.

Commodities

Gold added 0.37 per cent. Silver gained 0.48 per cent. Copper fell 0.58 per cent. Oil gained 0.78 per cent.

Figures around the globe

European markets closed lower. London’s FTSE fell 0.76 per cent, Frankfurt lost 1.05 per cent, and Paris closed 1.36 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei was closed, Hong Kong’s Hang Seng lost 1.39 per cent while China’s Shanghai Composite closed 0.26 per cent higher.

The Australian sharemarket closed 0.67 per cent lower at 7,230

Ex-dividends

Briscoe Group (ASX:BGP) is paying 11.4879 cents unfranked
Bisalloy Steel (ASX:BIS) is paying 9.5 cents fully franked
Enero Group Ltd (ASX:EGG) is paying 4.5 cents fully franked
Ipd Group (ASX:IPG) is paying 4.7 cents fully franked
Mader Group Limited (ASX:MAD) is paying 3.4 cents fully franked
Macmahon Holdings (ASX:MAH) is paying 0.45 cents unfranked
Service Stream (ASX:SSM) is paying 1 cents fully franked

Dividends payable

Bapcor Ltd (ASX:BAP)
Coronado Global Resources Inc (ASX:CRN)
Deterra Royalties Ltd (ASX:DRR)
MyState Ltd (ASX:MYS)
Sensera Ltd (ASX:SE1)
Summerset Group Holdings Ltd (ASX:SNZ)
TPC Consolidated Ltd (ASX:TPC)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

Disclaimer

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