Yahoo Finance Could June Bring Relief to Freeport-McMoRan after May Mayhem?
A Deeper Dive into May 2016 Copper Industry Indicators
May mayhem
May has generally not been a happy month for equity investors (DIA). This phenomenon is infamously referred to as “sell in May and go away.” When broader markets fall, mining shares can’t be far behind. Companies in the metals and mining space have witnessed substantial downward price action in May.
What’s driving the correction?
Prior to May, mining companies saw decent upward price action between February and April as concerns over China’s slowdown eased. Now May is turning out to be a rough month for miners such as Rio Tinto (RIO) (TRQ) and BHP Billiton (BHP) as concerns over the health of China, the world’s second-largest economy, have resurfaced. With recent US economic data coming in better than expected, interest rate hike talks have also revived. Last year, the Fed’s rate hike spooked the global markets.
Freeport-McMoRan (FCX), which led the mining sector’s rally from the start, has fallen more than 20% so far in May. However, it has risen ~60% year-to-date. Note that asset sales have been a key driver of Freeport’s price action this year, as you can see in the graph above. You can read more about Freeport’s asset sales program in our series Understanding the Strategic Importance of Freeport’s Asset Sales.
Series overview
In this series, we’ll take a look at some of the macro indicators that Freeport-McMoRan investors should track. These indicators should help you understand what lies ahead for the company in this volatile year. We’ll also be looking at some of the major Chinese indicators. As the biggest copper consumer, China drives the global copper industry.
Let’s begin by looking at the recent trend in copper prices.
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