Six large cap metal stocks -- Teck Resources (TCK) , Century Aluminum (CENX) - Get Century Aluminum Company Report, Stillwater Mining (SWC) , ArcelorMittal (MT) - Get ArcelorMittal SA ADR Report, United States Steel (X) - Get United States Steel Corporation Report and Freeport-McMoRan Copper & Gold (FCX) - Get Freeport-McMoRan, Inc. (FCX) Report -- lost 11.3%, 4.8%, 3%, 12%, 5% and 3.8%, respectively during the week ended May14. In comparison, the S&P 500 fell 2.1% on rising euro zone concerns.
We note that this excessive decline stems from the fact these stocks are high-beta stocks having a beta of 2.15, 2.80, 1.84, 1.66, 1.60 and 1.43, respectively. A high-beta stock increases or decreases (in percentage terms) more than the index.
This has been the trend for close to a month now. In the last one month or so, the S&P 500 has declined about 7%. In contrast, these stocks have declined anywhere between 10% and 23%, with Teck Resources and ArcelorMittal being the worst performers.
During the last week, UBS rated Teck Resources buy with a price target of $53.65, while Cormark Securities rated U.S. Steel sell with a price target of $40.
These stocks will only post a comeback if markets move up. We forecast a positive outlook for markets this week, primarily due to positive data releases/events coming up.
The data release from the U.S., includes Empire State Manufacturing, net long-term tic inflows, housing starts, building permits, consumer price index (CPI), leading indicators, initial jobless claims, and continuing claims.
As per the Bloomberg expectations, a few data suggest improvement from the prior levels and thus would help to boost the markets as well as the metals pack, while others might be disconcerting.
According to the survey, net long term Treasury International Capital (TIC) inflows for March month are expected to improve to $50 billion as against $47.10 billion recorded during February. Housing starts are forecasted to record a month-over-month jump of 3.80% in April compared with a 1.60% increase in March.
Initial jobless claims are expected to come down by 4,000 week over week to 440,000, compared with 444,000 a week earlier. Moreover, continuing claims for the week ended May 8 are estimated to fall by approximately 20,000 to 4.61 million from 4.63 million.
In a regulatory filing with the
Securities and Exchange Commission
, Singapore state investor
revealed that it bought 382,000 shares in Freeport-McMoRan Copper & Gold. The stake is valued at $27 million based on Freeport's Friday's closing price of $69.72.
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