Copper price rose by more than 2 per cent today as the market refocused on the reopening of most economies. Other metals like silver, gold, and palladium also rose. The same was true for other commodities like crude oil and soybeans.
The Bloomberg Commodity Index (BCOM), which tracks the commodity market rose by almost 2%, its best-day performance in months.
As a result of the jump in copper price, the stock prices of most mining companies rose. In the United Kingdom, the FTSE 100 was led by companies like Fresnillo, Anglo American, Rio Tinto, BHP, Centrica, and Glencore among others.
BHP share price has been rallying since March 15, when it was trading at p920. Today, the price is trading at p1500, which is a 60% gain from the March low. This makes it the second-best performing mining company in the FTSE 100 after Rio Tinto, whose stock has been on a bigger rally.
At the current BHP share price, investors are paying a price to earnings ratio of about 12.3 for a company with a dividend yield of 5.6%.
Perhaps investors believe that its stock will continue to rise as demand for its commodities like copper and iron ore rise. Indeed, data from China last week showed that its exports and imports were rising. His means that the company will likely continue to do well in the near term.
Another signal being sent by BHP is that copper price may continue to rise. As I have written before, copper is often viewed as a barometer for the world economy. That is why the price of copper dropped to the lowest level in years in March at the peak of the virus. Therefore, as the world reopens, we can expect its price to continue rising.
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Copper price reached a high of 2.4316 last week. This was the highest level since the slump in March. On the daily chart, the price is now slightly above the 50-day EMA but lower than the 100-day EMA. The price is also slightly below the 50% Fibonacci retracement level. Furthermore, the price of copper is forming a bullish engulfing pattern. Therefore, I expect the price to attempt to move above last week’s high of 2.4316 as bulls remain in control.
On the other hand, a move below 2.3119 will invalidate this prediction. This price is at the intersection of the 38.2% Fibonacci retracement level. It is also along the lower shadow of the hammer pattern formed on May 14.