Tightening US fiscal policy will ultimately be bullish for miners reckons JP Morgan, though it might be a bumpy ride.
Metal prices crashed in 2015-16 as the global economy slowed, but this time the supply condition is very different and there is not US$1trn of additional capacity that entered the market just as it slumped said the broker.
JPM expects the US Fed to begin tapering early 2022, with the first US rate hikes in 2023.
Before then, JPM expects a bumper crop of earnings from the big players.
Rio Tinto PLC (LON:RIO) and BHP PLC (LON:BHP) will confirm their status as Europe’s largest dividend payers with their half-year numbers.
Glencore will be led by a new CEO for the first time since its 2011 IPO and JPM is predicting record-beaking US$19bn underlying earnings in 2021.
“More negatively, companies we engage with are experiencing double-digit inflation across multiple cost inputs.”
JPM has overweight ratings on all three with punchy targets including Rio at £83, BHP’s target is £28 and Glencore £4.