StockBeat: Miners Lead Charge as the Real World Strikes Back

© Reuters.

By Geoffrey Smith 

Investing.com -- The real world is back.

As Europe lifts more and more of its coronavirus lockdowns, stocks are recovering their footing too. By 5:30 AM ET (0930 GMT), the benchmark Stoxx 600 index was up 1.9% at 334.80, while the German DAX index was up 2.6% and the FTSE 100 was up 2.0%, helped generously by a further weakening of the British pound.  

Specifically, the stocks that have been punished most for living in the physical world rather than the virtual one outperformed: in the U.K., food chains like Restaurant Group and Greggs were up 5.3% and 4.5% respectively, while Just Eat Takeaway (AS:TKWY) was up only 0.6%; online estate agents Onthemarket (LON:OTMPO) and Rightmove (LON:RMV) were flat and up 0.6%, while brickmaker Ibstock was up 4.3% and builders’ merchant Travis Perkins (LON:TPK) was up 2.0%. Primark owner Associated British Foods  (LON:ABF) was up 3.1%, for once outperforming online-only rival boohoo.com  (LON:BOOH), which was up 1.7%.

On the mainland, software stalwart SAP (DE:SAPG) is outperforming first-quarter market darling TeamViewer (DE:TMV), Societe Generale SA (PA:SOGN) was outperforming payments company Worldline (PA:WLN), while Borussia Dortmund (DE:BVB), which resumed its Bundesliga season at the weekend, was outperforming video games maker Rovio Entertainment (HE:ROVIO).

The odds on that lasting for any length of time may not be all that great, given the power of the long-term trends behind their respective investment cases, but something has still changed as regards the demand for physical goods to support physical activity.

Blackrock’s World Mining fund, which has a broad exposure to the makers of iron ore, copper, aluminum and nickel, was up a whopping 7.4% by 5:30 AM ET (0930 GMT).

Within the sector, iron ore giants BHP Group (LON:BHPB) and Rio Tinto (LON:RIO) were up 5.4% and 5.1% respectively, while Glencore (LON:GLEN), which has big exposures to copper, zinc, coal and oil, was up 5.1%.

However, the biggest upward moves were by miners of something that is not a play on industrial activity: gold. FTSE 100 member Fresnillo (LON:FRES) shares rose 8.9% as prices for the haven metal hit a seven-year high, while the midcap Hochschild Mining  (LON:HOCM) shares rose over 10% after it said its key mines in Peru had received permission to reopen, having been closed due to lockdown orders.

Another indication that Monday’s move was more a mean-reversion trade rather than a real expression of belief in the world economy is that Johnson Matthey (LON:JMAT), which specializes in turning platinum and palladium into exhaust cleaning systems for cars and trucks, was up only 2.4%.