Mining companies are again leading the UK’s UK 100 as base metals prices get a boost despite a still resilient USD. As at 22 Feb, Copper has been in an uptrend since mid-January and is testing 13-day falling highs 4800, Nickel has followed suit to 8720 and Iron Ore has broken out from a bullish technical pattern at 340 to test 350. Now is as good a time as any to talk about the drivers for the UK’s mining stocks – once you know what to look for, you’ll be amazed at the observations you can make for yourself!

Safe havens Gold and Silver are well off their recent historic highs, and this is a sign of a return of market confidence. With confidence comes risk appetite and it’s this that decides whether or not the UK’s blue chip mining companies – the likes of Glencore (GLEN), Anglo American (AAL) and Antofagasta (ANTO) – will have a good day, week, month or year. Miners currently represent some of the most volatile stocks on the UK Index , able to move in excess of 5% in a day.

So what’s driving things at the moment?

Firstly, all three of the aforementioned commodities are tracking the recent global equity market rally, benefiting from bets (hopes…) that current supply levels will be reined in to support prices, which are currently seen to be unsustainably low.

Secondly, there is also perhaps optimism that soft Chinese macro-data will result in more stimulus from Beijing. There will no doubt be hopes that the nation’s new securities regulator will grease the wheels of the Chinese IPO market and help to bring Chinese equities further off their recent lows. After all, it’s not just 2016’s losses that need stemming – it’s those since last summer too! Such a ‘bad news = good news’ mentality is often seen to be a boon for commodities and the UK 100 ’s mining companies.

Lastly, What we could also be seeing here is a read across from the oil price, which has managed to shrug off a lot of the negativity that saw it into 2016. But this is a little more tenuous. Worryingly, the fundamentals don’t appear to have changed much – OPEC still can’t agree on a way to stabilise prices, China is still growing at a slowing pace, The US Central Bank can’t decide on how to proceed with monetary policy and we now have the added uncertainty of the Brexit issue.

The upshot of all this is that things remain uncertain, but that shouldn’t necessarily be taken as a negative. The miners (along with the banks) are known for presenting some of the best short term trading opportunities in such times.