The Globe and Mail reports in its Wednesday edition that the exuberant rally in
mining shares this year is hitting a rough
patch.
The Globe's Ian McGugan writes that a weak reading on China's manufacturing
sector hammered the
stocks of many miners on Tuesday.
Analysts cautioned that the
recent surge in mining shares
may have been too much, too
fast, for a sector that was devastated
in 2015.
Capital Economics analyst Caroline Bain says in a note: "We are a little concerned about
the scale of recent gains. Prices are starting to
look vulnerable if, as we expect,
the U.S. economy bounces back."
All of the top 10 performing
stocks on the Toronto Stock
Exchange this year are miners.
Several of the big gainers, including
Kinross Gold, Barrick
Gold and Teck Resources, have more than doubled
since Jan. 1.
The sector's huge advance, however, is
now creating skeptics. Citigroup
analysts argued in a report last
month that the share prices of
global miners had "run too hard,
too fast and valuations look
stretched."
Ms. Bain was previously more optimistic on commodities, but has now reversed the view. Her new, darker outlook is
based on a rebounding United States dollar.
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