Thank a gloomier-than-expected U.S. economic outlook for the biggest rebound in mining stocks since the global financial crisis.
Pummeled in the past year amid faltering Chinese demand and the prospect of higher interest rates, mining stocks are now surging the most in seven years. Freeport-McMoran Inc. and Anglo American Plc paced gains among major producers, with the Bloomberg World Mining Index’s combined market value swelling by $44 billion in the past two days.
Behind the rally is a sliding dollar amid speculation that global growth may not be strong enough to warrant further central-bank tightening. That makes commodities cheaper in other currencies, boosts the appeal of haven investments such as gold and signals lower credit costs for producers.
“It’s a perceived U.S. dollar weakness that is driving all this,” Hunter Hillcoat, an analyst at Investec Plc, said by telephone. “The response has been staggering and we feel it has been exaggerated by the thinness of the equity market.”
The dollar’s retreat was sparked by data showing the U.S. services sector grew at the slowest pace in nearly two years, underscoring the vulnerability of the American economy to unsteadiness abroad.
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