LAC:CC - Materials Sector Weekly Round-up: WFG tops list over alleged takeover bid; Gold miners drop over pressure on gold prices

The S&P 500 Materials index closed this trading week in green, up around 3% , making it one of the top gainers among 11 sectors. The Materials Select Sector SPDR ( XLB ) was also +2.8% .

Copper prices registered their first weekly rise in seven weeks on Friday, as investors returned to riskier assets after easing expectations for U.S. interest rate hikes, helping dollar-priced metals. LME benchmark copper ( HG1:COM ) gained 0.9% to $7,388/metric ton, recording around 3% gain for the week.

Iron ore futures also rose on Friday, with the Dalian benchmark contract ( SCO:COM ) rebounding from a seven-month low, as falling steel inventories in China prompted hope for some replenishment-driven demand.

Industrial metals prices had rebounded on Monday, with LME benchmark copper ( HG1:COM ) +2.7% to $7,385/metric ton after dropping below $7K/ton in the previous session (its lowest since November 2020). LME aluminum, zinc, nickel, lead and tin were all climbed higher, according to Reuters.

Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen, said that "The market was increasingly oversold, where short-sellers were looking for an excuse to cover shorts and they found that today with the China story and the weaker dollar." However, Hansen warns that industrial metals have the risk of further weakness, addding that "This is still a bear market bounce, and it's too early to predict whether this will turn into consolidation and a recovery."

Gold ( XAUUSD:CUR ) , meanwhile, touched a near 16-month trading low on Thursday at $1,680.87/oz., before rebounding to $1,726/oz. on Friday. The yellow metal reversed earlier losses, after the European Central Bank raised interest rates by more than expected, which capped gains in the U.S. dollar.

Take a look at this week's top gainers among basic material stocks ($2B market cap or more):

• West Fraser Timber ( WFG ) +16.44% ; Shares jumped after media reports of a takeover proposal from CVC Capital Partners and Kronospan, although the firm later said it did not receive a bid .
• Ufp Industries ( UFPI ) +15.83% ; The company posted better-than-expected Q2 numbers this week.
• Axalta Coating Systems ( AXTA ) +11.54% ; Axalta was upgraded at KeyBanc on Wednesday, which said it expects U.S. chemicals companies to report mostly strong Q2 results followed by a "tougher" H2.
• Lithium Americas ( LAC ) +9.01% ; LAC and other lithium miners rallied in Thursday's trading after Elon Musk pushed for entrepreneurs to enter the lithium refining business during Tesla's Q2 earnings conference call .
• PPG Industries ( PPG ) +8.97% ; Shares rose after a Q2 earnings beat and record quarterly revenues of $4.7B, 8% higher than a year earlier.

The week's top decliners among basic material stocks ($2B market cap or more):

• Agnico Eagle Mines ( AEM ) -7.55% ; Agnico and other gold miners including Newmont and WPM were hurt this week as the precious metal's prices dropped.
• Newmont ( NEM ) -7.46% ;
• Teck Resources ( TECK ) -6.60% ; Shares continue to drop even as copper prices gained some ground this week after seven weeks in red.
• Wheaton Precious Metals ( WPM ) -5.52% ;
• SSR Mining ( SSRM ) -4.56% ; Shares have dropped -15.55% since the firm confirmed a temporary halt of operations at the Copler gold mine in Turkey.

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 ).

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