Basic materials was one of the eight sectors in the S&P 500 (SP500) to close in the red for this week, leading to the index posting its fourth weekly loss in five. Materials was down -1.89%, and the Materials Select Sector SPDR ETF (XLB) -1.84%.
Inflation worries dominated headlines during the week, with the Federal Reserve saying it was committed to its aggressive rate-hike stance in response and that it didn’t see inflation slowing.
The Fed’s aggressive policy is disrupting several asset classes. Higher interest rates have strengthened the dollar and gained against gold, silver, and bitcoin. Friday, gold prices (XAUUSD:CUR) dropped 1.42% to $1,652.30 per ounce. Silver (XAGUSD:CUR) sank 3.90% to $18.36 per ounce.
Gold gained last week but its advance was trimmed as prices plunged further below $1,700/oz in the latest week, coming under pressure from the stronger dollar and weak risk sentiment in equity markets.
“A longer period before a change in the Fed’s stance could mean that the gold price is pinned down for longer,” analysts at Heraeus wrote Monday.
Meanwhile, aluminum prices (LMAHDS03:COM) got a boost during the week after Reuters reported Alcoa (AA) is lobbying the Biden administration to block U.S. imports of aluminum from Russia following the latest military escalation in Ukraine.
However, prices of the metal fell on Friday and offset some of the gains made earlier amid rising inventories. Aluminum inventories rose this week in LME-registered warehouses by 41,400 tons to 367,200 tons.
Take a look at this week’s top gainers among basic material stocks ($2B market cap or more):
- Braskem (BAK) +25.61%; ADRs surged after Brazil’s O Globo newspaper reported Apollo Global Management (APO) made a new higher proposal for the company.
- Innospec (IOSP) +7.49%
- Posco Holdings (PKX) +6.22%
- Commercial Metals Company (CMC) +5.50%; The firm posted Q4 results during the week, reporting the second-best core EBITDA in its history.
- Scotts Miracle-Gro (SMG) +5.26%
Here are the top losers among basic material stocks ($2B market cap or more):
- Enviva (EVA) -22.23%; Shares plunged in reaction to a short call from Blue Orca Capital.
- Albemarle (ALB) -13.91%; Morgan Stanley and Berenberg both said this week they are anticipating a sharp drop in lithium prices.
- Companhia Siderurgica Nacional (SID) -12.86%
- AngloGold Ashanti (AU) -12.51%
- Vale (VALE) -10.05%
Other materials ETFs to watch: iShares Global Timber & Forestry ETF (WOOD), Materials Select Sector SPDR ETF, Vanguard Materials ETF (VAW), iShares Global Materials ETF (MXI), SPDR S&P Metals and Mining ETF (XME), VanEck Vectors Gold Miners ETF (GDX), iShares MSCI Global Gold Miners ETF (RING), Global X Copper Miners ETF (COPX).