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Investing.com -- RBC Capital Markets said copper prices have climbed in recent weeks on improving U.S.-China trade sentiment and a weaker dollar, but warned that a potential U.S. tariff decision on the metal could act as a negative catalyst.
While strong metals prices are expected to help mining companies offset weaker second-quarter operational performance, RBC said equity valuations have largely caught up to commodity gains.
Copper equities under its coverage are up 14% year-to-date, outpacing the 4% rise in LME copper prices after lagging earlier in the year.
The firm noted that several miners are pointing to stronger output in the second half, suggesting Q2 may mark a low point for production.
It highlighted Hudbay, Capstone and First Quantum among its preferred names, citing improving free cash flow and project de-risking efforts.
RBC expects Freeport-McMoRan (NYSE:FCX) to post a strong quarter, helped by high gold prices and delayed Q1 sales.
For Teck Resources (NYSE:TECK), the key will be whether weak production and grades at its QB mine in April persisted through May and June.
First Quantum’s results may reflect lower quarter-over-quarter production, in line with guidance, but investor focus will remain on the situation in Panama.
RBC estimates that the market is pricing in about half the potential value of the Cobre Panamá asset.
Elsewhere, Ivanhoe Mines (OTC:IVPAF) may report a disrupted quarter due to a recent seismic event, while Capstone is expected to show continued operational improvement in Chile.
Hudbay faces a temporary production hit from wildfires in Manitoba, though Peru grades are set to improve later in the year.
RBC maintained a positive medium-term outlook for copper, expecting fundamentals to improve into 2026 if trade conditions stabilize and supply remains tight.