Tap 5 Mining Stocks That Surged On Thursday's Rally

On Thursday, U.S stocks climbed straight into the record books fuelled by better–than-expected results from J.P Morgan Chase & Co. (NYSE:JPM) and upbeat economic data. These have quelled Brexit fears for the time being.

The first of the big US banks to produce quarterly results, JP Morgan’s earnings of $1.55 per share not only significantly beat the Zacks Consensus Estimate of $1.43, but also posted a 1% year-over-year increase. The sound performance set an upbeat mood for upcoming earnings releases from big banks and triggered a rally in financial stocks yesterday.

The S&P Index gained 11.32 points or 0.53% yesterday to close at 2,163.75. The S&P also closed at record high for the fourth straight day, marking its longest such winning streak since 2014. The Dow Jones Industrial Average rose 134.29 points or 0.7% to 18,506.41. The Nasdaq Composite Index gained 0.6% to a more than six-month high of 5,034.06.

Japan's Monetary Hopes, New PM for UK Fuel Markets

The surge in global equities on Thursday grew on the speculation that Japan’s Prime Minister Shinzo Abe is contemplating a big spending package to be announced later this month. Lately, Japanese markets have been rife on speculation that the country is considering “helicopter money,” where a central bank directly funds government spending through programs such as perpetual bonds. Bank of Japan will remain under pressure to expand monetary stimulus at its rate review on July 28-29.

Further, with British Home Secretary Theresa May taking over the reins from Prime Minister David Cameron, the market sentiment has received a huge boost. The sooner–than-expected appointment cleared a large cloud of uncertainty hovering over the markets. Meanwhile, the Bank of England maintained its key rate at a record low of 0.5%. It also stated that most members of the committee expect monetary policy to be loosened in August.

Soaring U.S. Jobs Data, Oil Price Rally Encourage

In the U.S., the labor market seems to be on a solid ground, with nonfarm payrolls beating expectations by adding 287,000 jobs in June. The strongest job growth in eight months dispelled fears over the health of the country’s economy. Following the dismal numbers of just 11,000 jobs in May, the Fed had maintained rates at its policy meeting in June, citing persistently low inflation and labor market concerns.

On Jul 14, the WTI crude oil was at $45.68 per barrel, a gain of approximately 2%. Brent crude oil was at $47.37 per barrel, an increase of 2.3%.

The broad rally in the markets had a positive impact on the basic materials sector. The Materials Select Sector SPDR Fund (XLB) emerged as one of the best performer among the S&P 500 sectors. The fund that seeks to closely match the returns and characteristics of the S&P Materials Select Sector Index gained 0.89% to close at $48.61 yesterday. It had hit its 52-week high of $48.70 yesterday having delivered a return of 7.63% year to date. The rise came on the back of heavy trading volume of 4,777,866.

In terms of industrial exposure, chemicals dominates its portfolio with 69% share followed by metals & mining (13%), containers & packaging (12) and construction (6%). Among chemical stocks, its top three holdings E. I. du Pont de Nemours and Co. (NYSE:DD) , The Dow Chemical Co. (NYSE:DOW) and Monsanto Co. (NYSE:MON) gained 1.2%, 1.2%, and 3.1%, respectively yesterday. It also holds miners such as Newmont Mining Corp. (NYSE:NEM) in its basket, which advanced 1.8%.