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MORGAN STANLEY TURNS UP THE HEAT ON EUROPE'S MINING SECTOR

Europe's metals and mining sector is back in the spotlight, Morgan Stanley says as it upgrades its industry view to "attractive" as intensifying supply stress and a weaker USD underpin a constructive setup into year-end.

On Wednesday, gold surged past $4,000 an ounce for the first time, as investors sought safety amid rising geopolitical tensions and bets on further U.S. rate cut.

In the words of Morgan Stanley's research team, "copper markets, in particular, are entering a pronounced deficit phase as supply disruptions escalate, driving the scarcity premium to new high". Iron ore is also benefiting from "seasonal restocking," while precious metals "continue to see inflows amid macro uncertainty – driving a price melt-up."

This matters because, as Morgan Stanley points out, the sector "continues to trade at a meaningful discount to the broader market," yet mark-to-market earnings upgrades of around 12% are expected for 2026, especially for copper and precious metals-exposed companies.

Industry consolidation - highlighted by the proposed Anglo American AAL.L and Teck Resources TECKb.TO merger- signals management confidence and willingness to "deploy capital into structurally supply-constrained commodities."

On Wednesday, Canadian miner Teck Resources cut its copper output forecast for the Quebrada Blanca mine in Chile through 2028, following an operational review and its merger with Anglo American.

Morgan Stanley's top picks include Glencore GLEN.L, which is trading at a discount and offers potential for shareholder payouts; KGHM KGH.WA, which benefits from copper and silver exposure and upcoming changes that could improve its value, and Endeavour Mining EDV.L, which is set to increase cash returns to shareholders over the next year.

(Akriti Shah)

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EARLIER ON LIVE MARKETS STEELMAKERS GIVE A BOOST TO EUROPEAN STOCKS CLICK HERE

EUROPEAN FUTURES POINTS TO MUTED OPEN CLICK HERE

GOLD AT $4K - BE AFRAID, BE VERY AFRAID CLICK HERE