It’s the UK Index Miners that are finding it hardest to get back to work after the long weekend, giving up 2-4% in a flat market. Holding back the sector are two drivers. The first is technicals after major breakdowns in the prices of key raw materials iron and copper, both barometers of global growth. The second is a stronger USD (3-week highs and still rising) which makes the latter more expensive. This is a product of Fed Chair Janet Yellen’s Jackson Hole speech last Friday, one which saw her accomplish the difficult task of offering something for both the doves and hawks on monetary policy watch.

The fact that US markets closed only marginally lower on Friday and posted gains last night suggests an absence of panic about another rate rise. Markets appear to be increasingly coming round to the prospect of another US rate hike this year. After all it would be at least 9 months since the last which is proof enough that the Fed is indeed planning on keeping the pace of rate rises slow and steady to avoid undue market stress. We’ve also been teed up for it for an age (much like last time). Furthermore, rate hikes imply economic recovery.

We still think December is more likely than September, even if Friday’s payrolls data is a blowout. Political event risk is simply too much to ignore. But it still doesn’t really make a difference. Peers are still keeping things easy elsewhere. However, watch for a revival in the oil price. The energy commodity has form in dictating sentiment within the metals space, and it’s already up of last week’s lows. Next month’s OPEC-led production freeze meeting may or may not be a big event. The run-up, however, is sure to be exciting which could help the Miners revive their 2016 uptrends.

Mike van Dulken, Head of Research, 30 Aug