Inflation? For now it doesn't affect us. Or almost, because the rise, if any, will be short-lived. From the minutes of the January meeting of the Fed a suspicious optimism of central bankers emerges, worry more about not disturbing the next maneuver by the Treasury than to put the reins on prices. Thinking wrongly, one suspects that the members of the board (three expiring at the end of the year) are already thinking about renewal. Markets, on the contrary, are rapidly adjusting to a scenario of rising prices. It applies to consumer goods and even more so to "basic materials", i.e. the complex of raw material which, under the pressure of the great cold that has upset the oil market, has now started moving with immediate repercussions for quotations. The result?
The Stoxx index of Basic subjects leaps 2,7% this morning, while the global Stoxx moves around parity. It is also the best year-to-date in Europe with an 18% gain, which compares with the +4,2% recorded by the global Stoxx over the same period.
Il Petroleum earn +25% since the beginning of the year. The European Basic Materials sector (today 588 points) managed to more than double in value from its March lows (+130%).
The rally allowed the English stock exchange to start a cycle of robust increases, at the highest since April 2012, erasing post-Brexit fears and consolidating the recovery of the pound. The flight, in reality, has very little to do with the farewell to the European Union. However, the City is home to five of the top six stocks in the Stoxx Basic Materials Index: Glencore (+27% since the beginning of the year), Antofagasta + 22% BHP + 20% Rio Tinto +18% and Anglo American + 17%.
To favor the march of the bull is not only the prospect of increased demand. In fact, the sector has already anticipated the recovery, as demonstrated by the luxury quarterly reports. Bhp Billiton, the world's largest mining group, announced the payment of a total dividend of $5,1 billion after posting the best profits in seven years. Glencore, clearly recovering after last year's difficulties, announced the recovery of the coupon already in the spring. Today also joined the return of the coupon Rio Tinto, the leader in ferrous materials (+85% prices since last December).
Copper will soon complete the picture of the recovery, driven upwards by demand from China. Prices have risen 80% from the lows of eleven months ago, during the lockdown of Chinese consumption and today they are hovering around the nine-year highs of 8.400 dollars a ton.
It's not just a question of the situation. To push the increase of Copper it's his too strategic value from the point of view of environmental policy. It is no coincidence that Bhp has surpassed Shell and Unilever in terms of stock market values, exceeding 170 billion dollars.
Even more important in the eyes of the shareholders, Rio Tinto and Bhp (which pays about half of its profits in dividends) are on the way according to JP Morgan to be the two companies that pay the most dividends in Europe.
