The Base Metal Blues

The world’s eighth-largest aluminum maker, Alcoa, threw investors for a loop on Monday, unexpectedly announcing a new chief executive officer (CEO). 😮

Roy Harvey has led the company since November 2016, when it went public, and will remain a strategic adviser until the end of 2023. He’ll be replaced by William Oplinger, who has served as executive vice president and chief operations officer (COO) since February of this year.

Although the company says this reflects its “succession planning process,” the market seemingly did not expect a change. However, it’ll likely have to wait until the company reports third-quarter results in mid-October for more color on the change and potential impacts. 📝

$AA shares fell 6% on the day to fresh 2.5-year lows. It has now given back 70% of its October 2020 to March 2022 gains. 😬

Other companies in its space have not fared particularly well this year either. Although the commodity sector has performed well in aggregate, most of the strength has come from energy and agriculture. The chart below shows the base metals ETF lagging its peers year-to-date, falling nearly 5%. 📉

We’ll have to wait and see if things improve. However, the global economy slowing down will remain a headwind for the group, including copper, aluminum, and zinc. 🤷

Are Investors Sleeping On Commodities?

We know pulling people’s attention away from stocks is tough, especially when they’re rallying. But as we close out the week, we wanted to point out that many of this week’s top-performing assets were commodities.

The chart below from Finviz shows that nine of the top ten performers this week were commodity futures, with Natural Gas topping the list at +16.19%. 🤩

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Crude Tops 90 As Inflation Ticks Up

Before we get into U.S. data, we need to discuss the European Central Bank’s (ECB) rate decision. The central bank surprised markets by raising rates another 25 bps to 4.00%, marking its tenth consecutive hike. 🔺

Unlike the U.S., Europe has not made as much progress in bringing down inflation, and its economy has not been as resilient. The region started raising rates later than the U.S. and experienced more direct impacts of the war in Ukraine, so it’s understandable that they’d be a bit behind the curve in making progress.

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Precious Metals Slowly Melt Lower

With the stock market catching its breath before a new earnings season begins, we’ve been trying to highlight other market trends. And right now, one of those is in the precious metals section of the commodities space. 👀

Gold, silver, platinum, and palladium are all considered precious metals for those unfamiliar. These metals are rare, naturally occurring metallic chemical elements of high economic value…hence the name. *cue the Gollum “my precious” meme.*

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