JP Morgan has highlighted undervalued opportunities in European mining stocks, particularly for companies exposed to high-demand commodities such as copper, aluminium, and gold.
As market uncertainty around US trade policy persists, the bank notes that oversold miners, including Lundin Mining and Norsk Hydro, could offer significant upside in 2025, supported by anticipated fiscal stimulus in China.
Since September, the European metals and mining sector has fallen by 17% in US dollar terms and 9% in pounds, reflecting fears over a potential US-China trade war and the devaluation of the Chinese yuan.
These pressures have been exacerbated by the lack of clarity surrounding President-elect Donald Trump’s trade and tariff policies, JP Morgan observed.
Phased tariffs
A phased or benign tariff regime under the new administration could trigger a relief rally in mining equities, the bank notes.
However, harsher measures—such as a 60% blanket tariff on US-China imports—could renew downward pressure on the sector.
Despite these near-term risks, JP Morgan expects a recovery in the first quarter of 2025, driven by stimulus measures likely to be announced during China’s National People’s Congress in March.
Industrial metals, particularly copper and aluminium, are forecast to benefit most from these initiatives, while gold and silver miners are seen as safer bets amid geopolitical uncertainty.
Outlook
The outlook remains mixed for some major players. JP Morgan has reiterated its cautious stance on Anglo American, which it expects to report $2 billion in impairments and delays in divesting its diamond business.
Meanwhile, Antofagasta and Boliden face ongoing challenges tied to commodity price volatility and cost inflation.
Gold and silver miners, however, are well-positioned. The American bank remains bullish on AngloGold, Hochschild, and Fresnillo, citing robust fundamentals and the potential for rising precious metal prices as a hedge against global economic instability.
While geopolitical risks weigh on the broader sector, JPM's analysis underscores that for investors willing to navigate volatility, European mining stocks offer both challenges and compelling opportunities as the landscape evolves in 2025.