Ground Breakers: Traders ‘buy on rumours, sell on facts’ as metals run and Coronado crashes

  • Rumors of Covid’s demise in China may have taken the plunge, but today they’re sparking a massive rush for ASX miners
  • The materials index is up 3.2%, led by gold, iron ore and copper stocks
  • Coal miner Coronado plunges after calling off merger talks with Peabody Energy

As if the adage “buy on rumor” could be more apt in our weird and crass times, the ASX 200 brand resource giants are in thin air today as a market rush inspired by Rumors of China unwinding Covid restrictions are making their way south.

The news sent markets into a U.S. sugar rush on Friday, with copper up 7.1% at US$8,099/t, zinc up 5.7% at US$2,874 /t, nickel jumping 4.4% to US$23,811/t and silver tumbling. the US$20/oz barrier.

Iron ore futures are back around US$85/t after hitting a yearly low of US$77.17/t last week, a move that prompted Westpac to cut its December forecast by 20%, from US$100/t to US$80/t on Friday .

Gold rose more than US$50 an ounce in the other big move, with US jobs gains still solid but rising at the slowest pace since December 2020, raising hopes that rising rate of 75 basis points last week could be the last of the US Fed at this level.

Beijing reiterated its commitment to Covid Zero over the weekend, potentially pointing to a pullback from the same products that soared on rumors of its impending end last week.

For now, the materials sector is enjoying the carryover from Friday’s frenzy, up 3.2%, with gold companies Northern Star (ASX:NST) and Newcrest (ASX:NCM) up 4.74 % and 2.47% respectively and iron ore miners BHP (ASX:BHP), Rio Tinto (ASX:RIO) and Fortescue (ASX:FMG) are all trading up more than 3%.

Among mid-caps, everything is golden, with Capricorn Metals (ASX:CMM) leading the way, the $1.4 billion entity rising 9.14%.

The Mark Clark-run gold miner, which restarted operations last week more than a fortnight after the death of a contractor at its Karlawinda gold mine in the Pilbara, picked the right day to announce a raise of 32% of the resources of its undeveloped Mt Gibson gold mine in the Mid West at 2.755Moz.

CMM is one of the few gold miners in the green this year, with its low-cost Karlawinda mine helping the former explorer a 13.5% gain while the All Ords gold sub index s has collapsed by 22.9% since the start of the year.

Ground Breakers stock price today:

Sell ​​on the spot: Coal edition

Turning now to our big loser of the day, Coronado Global Resources (ASX:CRN), which sold off heavily after announcing the end of merger talks with American Peabody Energy.

“Coronado Global Resources Inc. announces today that it has jointly agreed with Peabody Energy Corporation to cease discussions regarding a possible combination of the two companies,” CRN told the ASX this morning.

“Today’s announcement does not impact Coronado’s fourth quarter plans, as outlined in our recently released quarterly production report and subsequent conference call last week.

“Coronado continues to pursue and implement its existing capital management plans and remains focused on its existing capital investments and long-term development strategy.”

The proposed deal would have seen the two resurgent coalfields combine, bringing together assets in the United States and Australia.

Peabody last week posted a profit of $375.1 million in the September quarter, compared to a loss of $44.2 million in the same period of 2021, while Coronado raked in $875 million revenue, announcing a surprise dividend of $225 million for investors.

The deal would have married Coronado’s coal-dominated operations with Peabody’s large thermal coal portfolio, an area CRN boss Gerry Spindler was looking to turn to, with high-energy thermal coal still enjoying a boost. Rare but increasingly high premium over premium coking coal.

He said markets don’t reward steelmaking coal producers for “purity of intent”, with the tons of CRN intermediates that can go either way in the thermal generation market.

CRN’s sales mix has grown from 82.2% achieved and 17.8% thermal coal in 2021 to 78.4% achieved and 21.6% thermal energy year-to-date in 2022.

Elsewhere in the coalfields, Nathan Tinkler and his seemingly endless array of investment vehicles are back after the disappointment of being squeezed out of the Dartbrook Coal Mine redevelopment in the Hunter Valley.

Learn more about it here.

His companies Oceltip Coal 1 and Oceltip Coal 2 will take a 19.92% stake in Canadian weather coal developer Jameson Resources (ASX:JAL), with a $10 million placement at 11.55 cents per share, a premium 70% on its 15-day VWAP.

Reuben Adams reports that Jameson’s shares have soared thanks to the deal. Despite declining coal inventories this year, Jameson has traded sideways so far.

It owns a majority interest in the Crown Mountain hard coking coal project and the overall Dunlevy project in the Canadian territory of British Columbia.

Jameson Resources (ASX:JAL) and Coronado Global Resources (ASX:CRN) stock prices today:

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