Mining stocks have taken a heavy blow since President Donald Trump’s sweeping tariff plan rattled global markets last week, but analysts at JP Morgan believe the sector may be poised for a sharp rebound ... just not quite yet.
For UK investors, the bank highlights Antofagasta PLC (LSE:ANTO), Rio Tinto Ltd (LSE:RIO, ASX:RIO, OTC:RTNTF), and precious metals producers such as Fresnillo PLC (LSE:FRES) and Hochschild Mining PLC (LSE:HOC, OTCQX:HCHDF) as top picks to watch during the current downturn.
Since the new US trade measures were announced, the metals and mining sector has fallen 13% and is now down around 50% compared to the MSCI Europe index since the start of 2023.
According to JP Morgan, mining shares are already pricing in a global recession, with assumed metal prices around 15 to 20 per cent below current levels; specifically, iron ore at about $80 a tonne and copper at $7,500 a tonne.
Drawing on past market cycles, analysts note that mining stocks have historically bounced back strongly once the worst has passed. In the last three major downturns (2009, 2016, and 2020) the sector outperformed broader European markets by around 100% after hitting bottom.
These recoveries were typically driven by stimulus measures in China, a pattern that could repeat in 2025. JP Morgan’s China economics team expects a fresh round of fiscal support equivalent to 0.7% of GDP in the third quarter.
However, the bank cautions it may be too early to call a bottom just yet. In past recessions, mining equities typically found their floor four months after the first sell-off - pointing to July as a possible inflexion point.
In the meantime, JP Morgan recommends selectively adding exposure to copper and gold miners, and to companies viewed as undervalued or strategically exposed, while waiting for greater clarity on trade and economic policy.