There was a generally improved performance from the mining industry last year based on financial reports received to-date from the leading mining companies. Increased sales and commodity prices led to higher earnings, although asset impairment contributed to many corporate losses. S&P Global Market Intelligence calculates that of the 25 largest mining companies (by market capitalisation) to have so far reported full-year results, 16 exceeded consensus earnings estimates (as calculated by S&P Capital IQ). Notable exceptions included BHP Group, which missed its earnings per share estimate by 5.3%.
There is also a sense of a 'renaissance' in the mining sector according to feed-back from last week's conference in Toronto organised by the Prospectors & Developers Association of Canada. This year's PDAC event saw almost 26,000 attendees from some 130 countries, and much of the focus was on mergers and acquisitions. The end of the conference coincided with Newmont Mining rebuffing the US$18 billion hostile offer from Barrick Gold in favour of its own US$10 billion deal with Goldcorp.
Global stock markets generally are enjoying their best start to a year in almost three decades, with the MSCI World Index up 11% so far in 2019. Nevertheless, concern over the global economy intensified at the end of last week after disappointing jobs statistics in the US, stagnating economic growth in Europe and a sharp fall in Chinese exports.
The growth in non-farm payrolls in the US last month was its lowest for 17 months, and was sharply lower than economists' predictions. The news saw a retreat in the value of the dollar and lower yields on US Treasury bonds in expectation that interest rates would remain low.
On Thursday, the European Central Bank cut its growth forecast for the eurozone and revived its crisis-era loan programme for banks. In the latest signal that central banks are responding to a rapidly worsening global outlook, the ECB made a new offer of cheap loans to eurozone banks, and signaled that interest rates would not be increased until 2020 at the earliest. Shortly afterwards Germany announced disappointing industrial production data.
To cap a troubling week, China reported its steepest year-on-year decline in exports for three years, which exacerbated worries about the effects of the trade war between Washington and Beijing. China's exports fell 20.7% in February, compared with a year ago, which is the largest one-month fall since February 2016. Imports fell 5.2%, resulting in the smallest trade surplus for China in 11 months. On Friday, in response to the announcements, Chinese equities suffered their worst one-day fall since October.
Despite the gathering gloom over the global economy, the price of 'safe-haven' gold fell 3.3% last week to close in London on Friday at US$1,285/oz. Less surprisingly, given the market conditions, there were significant price falls for aluminium (down 2.2% at US$1,864/t) and copper (1.4% lower at US$6,389/t). Iron ore (62% Fe) fell heavily at the end of the week on the news of the lower Chinese exports but was still up 0.4%, at US$84.9/t, over the week as a whole. Nickel improved 0.9% to US$13,075/t and zinc closed on Friday at US$2,715/t, little changed on the week.