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Feb. 2, 2021, 11:43 a.m. EST

Miners decline as JPMorgan downgrades sector and silver prices slide from eight-year high

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By Jack Denton

Shares in many of the major European miners slid in Tuesday trading, as the sector was downgraded by investment bank JPMorgan and silver prices fell back from the highs reached on Monday.

Strategists at JPMorgan /zigman2/quotes/205971034/composite JPM -0.01% “tactically” downgraded the Europe, Middle East, and Africa mining sector to neutral from overweight, viewing it as “short term profit-taking as miners could continue to benefit if reflation takes hold, if U.S.$ weakens further and have resilient balance sheets.”

JPMorgan said that the European mining and metals sector has been one of the standouts in the past year, up 150% since March 2020 and the best sector in the MSCI Europe stock index. 

Miners have been boosted by massive fiscal stimulus in China — a major purchaser of iron ore — as well as loose monetary policy and coordinated fiscal stimulus elsewhere.

Read more: After 10 Years of Underperformance, Commodities Are Set to Boom. Here’s How to Play the Rally.

The investment bank kept BHP — its top pick — and Rio Tinto overweight, but downgraded Anglo American and Boliden to neutral as well as knocking First Quantum down to underweight.

European miners largely slid, with shares in BHP /zigman2/quotes/203323256/delayed UK:BHP -2.13% , Boliden /zigman2/quotes/209139624/delayed SE:BOL -0.85% , Rio Tinto /zigman2/quotes/208934945/delayed UK:RIO -2.36% , Anglo American /zigman2/quotes/201381512/delayed UK:AAL -1.50% , Glencore /zigman2/quotes/201400686/delayed UK:GLEN -1.15% , and Polymetal International /zigman2/quotes/204469675/delayed UK:POLY -0.78% falling.

Compounding woes for some miners is the slip in silver /zigman2/quotes/210315219/delayed SI00 +0.50% , which touched eight-year highs on Monday on a wave of retail trading interest. CME Group, a major financial derivatives exchange, hiked trading margins on silver futures by 18% amid the buying frenzy.

Silver was trading below $27 per ounce, down more than 8% since Monday’s close.

Shares in Fresnillo /zigman2/quotes/201300065/delayed UK:FRES +0.59% , the world’s largest silver ore producer, slid near 5%. Midcap stock Hochschild Mining /zigman2/quotes/201786939/delayed UK:HOC -1.58% , also a silver producer, fell more than 10%.

Also read: WallStreetBets has silver in its sights, but here’s why this speculative rush may be ‘short-lived,’ says analyst

Plus: Silver futures pull back as margin requirements hiked following spike to 8-year high

Across European markets, stocks marched higher, continuing momentum from yesterday’s rally and looking to recoup the losses from poor trading in the week prior.

The pan-European Stoxx 600 /zigman2/quotes/210599654/delayed XX:SXXP -2.10% was 1.4% higher, while London’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -2.17% rose 0.8%. In Paris the CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 -2.08% jumped up 2% and Frankfurt’s DAX /zigman2/quotes/210597999/delayed DX:DAX -2.35% rose 1.6%.

The Dow /zigman2/quotes/210598065/realtime DJIA -0.10% was up around 590 points, a near-2% rise to continue gains from Monday, when the index rose 230 points and closed at 30,211.

Shares in LVMH /zigman2/quotes/201350549/delayed FR:MC -1.81% , Kering /zigman2/quotes/204653408/delayed FR:KER -1.38% , and Richemont /zigman2/quotes/203783259/delayed CH:CFR -2.64% all surged. These luxury goods stocks fell to begin the week, which Deutsche Bank analyst Francesca Di Pasquantonio put down to “tighter lockdowns, vaccine hitches and U.S. retail trading volatility.”

Shares in Siemens Energy /zigman2/quotes/221435471/delayed XE:ENR -1.44% dropped more than 1%. In quarterly results posted on Tuesday, the group said that it would cut 7,800 jobs in a bid to improve margins.

BP /zigman2/quotes/202286639/delayed UK:BP -1.87% stock slid more than 4.5%, after the oil supermajor reported its first full-year loss in a decade. Underlying profits for the final three months of 2020 fell well short of analyst expectations, concluding a brutal year for the company in which oil demand largely dried up as a result of the COVID-19 pandemic.

/zigman2/quotes/205971034/composite
US : U.S.: NYSE
$ 161.22
-0.02 -0.01%
Volume: 14.01M
May 10, 2021 4:00p
P/E Ratio
12.80
Dividend Yield
2.23%
Market Cap
$488.09 billion
Rev. per Employee
$498,110
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/zigman2/quotes/203323256/delayed
UK : U.K.: London
2,325.00 p
-50.50 -2.13%
Volume: 1.13M
May 11, 2021 12:14p
P/E Ratio
21.74
Dividend Yield
4.95%
Market Cap
£132.14 billion
Rev. per Employee
N/A
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/zigman2/quotes/209139624/delayed
SE : Sweden: Stockholm
kr 356.40
-3.05 -0.85%
Volume: 766,226
May 11, 2021 1:14p
P/E Ratio
12.33
Dividend Yield
2.31%
Market Cap
kr96.63 billion
Rev. per Employee
kr9.28M
loading...
/zigman2/quotes/208934945/delayed
UK : U.K.: London
6,501.00 p
-157.00 -2.36%
Volume: 960,686
May 11, 2021 12:14p
P/E Ratio
13.98
Dividend Yield
6.28%
Market Cap
£107.90 billion
Rev. per Employee
£732,787
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/zigman2/quotes/201381512/delayed
UK : U.K.: London
3,357.50 p
-51.00 -1.50%
Volume: 700,810
May 11, 2021 12:14p
P/E Ratio
26.08
Dividend Yield
2.18%
Market Cap
£41.73 billion
Rev. per Employee
N/A
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/zigman2/quotes/201400686/delayed
UK : U.K.: London
327.45 p
-3.80 -1.15%
Volume: 10.57M
May 11, 2021 12:14p
P/E Ratio
N/A
Dividend Yield
2.60%
Market Cap
£43.00 billion
Rev. per Employee
£765,499
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/zigman2/quotes/204469675/delayed
UK : U.K.: London
1,599.00 p
-12.50 -0.78%
Volume: 559,908
May 11, 2021 12:13p
P/E Ratio
9.07
Dividend Yield
5.73%
Market Cap
£7.66 billion
Rev. per Employee
£185,178
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/zigman2/quotes/210315219/delayed
US : U.S.: Nymex
$ 27.63
+0.14 +0.50%
Volume: 16,522
May 11, 2021 7:19a
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/zigman2/quotes/201300065/delayed
UK : U.K.: London
925.60 p
+5.40 +0.59%
Volume: 388,757
May 11, 2021 12:13p
P/E Ratio
23.65
Dividend Yield
1.98%
Market Cap
£6.71 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/201786939/delayed
UK : U.K.: London
199.00 p
-3.20 -1.58%
Volume: 408,457
May 11, 2021 12:11p
P/E Ratio
90.05
Dividend Yield
2.34%
Market Cap
£1.02 billion
Rev. per Employee
£136,838
loading...
/zigman2/quotes/210599654/delayed
XX : STOXX
436.03
-9.36 -2.10%
Volume: 0.00
May 11, 2021 1:14p
loading...
/zigman2/quotes/210598409/delayed
UK : FTSE UK
6,968.91
-154.77 -2.17%
Volume: 305,603
May 11, 2021 12:14p
loading...
/zigman2/quotes/210597958/delayed
FR : France: Euronext Paris
6,253.04
-132.95 -2.08%
Volume: 30,821
May 11, 2021 1:14p
loading...
/zigman2/quotes/210597999/delayed
DAX
DX : Xetra Indices
15,038.41
-362.00 -2.35%
Volume: 30,287
May 11, 2021 1:14p
loading...
/zigman2/quotes/210598065/realtime
US : Dow Jones Global
34,742.82
-34.94 -0.10%
Volume: 370.04M
May 10, 2021 5:40p
loading...
/zigman2/quotes/201350549/delayed
FR : France: Euronext Paris
613.70
-11.30 -1.81%
Volume: 197,097
May 11, 2021 1:14p
P/E Ratio
65.81
Dividend Yield
0.98%
Market Cap
€318.16 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/204653408/delayed
FR : France: Euronext Paris
694.70
-9.70 -1.38%
Volume: 48,784
May 11, 2021 1:14p
P/E Ratio
40.39
Dividend Yield
1.15%
Market Cap
€86.83 billion
Rev. per Employee
€339,797
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/zigman2/quotes/203783259/delayed
CH : Switzerland: SWX
CHF 92.96
-2.52 -2.64%
Volume: 484,180
May 11, 2021 1:13p
P/E Ratio
220.18
Dividend Yield
1.08%
Market Cap
CHF54.06 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/221435471/delayed
XE : Germany: Xetra
25.31
-0.37 -1.44%
Volume: 783,404
May 11, 2021 1:13p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
€19.06 billion
Rev. per Employee
€295.24M
loading...
/zigman2/quotes/202286639/delayed
UK : U.K.: London
309.80 p
-5.90 -1.87%
Volume: 16.91M
May 11, 2021 12:14p
P/E Ratio
N/A
Dividend Yield
4.81%
Market Cap
£63.24 billion
Rev. per Employee
£2.21M
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