Basic Materials Roundup: Market Talk

The latest Market Talks covering Basic Materials. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.

1017 ET - Tariffs Canada will impose in retaliation for new U.S. levies will help some industries but hurt most and weaken economic growth by raising costs for producers and consumers, Oxford Economics argues. And Oxford's analysis suggests fiscal relief planned by Ottawa will briefly soften the economic impact of the Trump administration's tariffs but won't offset the overall drag from bilateral levies. It says paper, wood, steel, and aluminum product manufacturers will see the largest marginal benefit from Canadian counter-tariffs, since they will reduce U.S. imports and encourage substitution toward domestic production. But Oxford adds nearly all Canadian manufacturers will feel net negative impacts from the bilateral tariff escalation.(robb.stewart@wsj.com; @RobbMStewart)

1011 ET - Canadian energy stocks lead the few gainers on the TSX after flare ups of fighting in the Middle East push oil prices higher. Crude oil is up 3% following U.S. strikes on Iranian rocket launch sites in the Strait of Hormuz. The higher price lifts Canada's major oil producers, with Vermilion Energy, Athabasca Oil, Strathcona Resources, Suncor and Cenovus among the top performs, rising 3.5%, 2.4%, 1.7%, 2.6% and 2.6%, respectively. The energy sector has experienced volatile trading in recent weeks as crude prices swing on shifting geopolitical tensions in the key oil-producing and exporting region. (adriano.marchese@wsj.com)

1003 ET - Gold futures are lower as U.S. strikes on Iranian targets push oil prices up, adding to the metal's losses seen Friday on Fed Chairman Kevin Warsh's inflation comments. "U.S. strikes near the Strait of Hormuz added a fresh headwind as oil rose, lifting inflation expectations," Kaynat Chainwala of Kotak Neo says in a note. "Direction from here stays tied to the Fed's rate path as further hawkish signals would extend the pullback, while a pause in yields could stabilize prices." Most active gold is off 1.3% in New York at $4,473.90 a troy ounce. Silver is down 0.9% at $67.16 a troy ounce. (anthony.harrup@wsj.com)

0945 ET - Capstone Copper's completed acquisition of the copper assets at the San Pietro copper-gold-iron-cobalt project adds scale to its Mantoverde-Santo Domingo District at a good price. TD Cowen's Craig Hutchison notes that the district now encompasses about 60,000 hectares, of which San Pietro makes up about 27%. The addition adds a "considerable resource base" of about 4.4 billion pounds of copper and 770,000 ounces of gold. At the $25 million transaction price in Capstone shares, Hutchison calculates that Capstone paid less than a cent per pound for the copper resources alone, excluding by-product credits. The analyst says that while the transaction is accretive on its own merits, there is more upside from consolidated district control, exploration potential and district synergies. (adriano.marchese@wsj.com)

0036 ET - Zeon is likely to benefit from supplying materials to battery manufacturers, Nomura analysts say in a research report. Battery makers have been focusing on stable output amid swiftly growing demand for energy storage systems, and their business conditions are now such that Zeon can leverage its track record in supplying materials to them, the analysts say. The brokerage also factors in the company's product-mix improvements stemming from increased sales of materials for European electric-vehicle applications. Nomura lifts this fiscal year's operating profit forecast for the Japanese company to 43.7 billion yen from 38.7 billion yen. It upgrades the stock to buy from neutral and raises the target price to Y2,830.0 from Y2,560.0. Shares are 4.5% higher at Y2,508.5. (ronnie.harui@wsj.com)

2213 ET - Gold declines in Asian trade. The precious metal's current pullback below the $4,600 level is likely to be a natural correction on profit-taking after a strong upward rally, says XS.com's Rania Gule in an email. While the environment remains supportive for gold on a fundamental basis, the market has become increasingly sensitive to expectations surrounding U.S. monetary policy, she says. "Elevated inflation, combined with continued uncertainty over economic growth, fiscal conditions, and bond markets, is making the Federal Reserve's task increasingly complicated," the analyst adds. A higher interest rate environment typically weighs on nonyielding assets like gold. Spot gold drops 0.6% to $4,426.48 a troy ounce. (megan.cheah@wsj.com)

1918 ET - The most notable point in Metals X's annual result was the absence of a dividend, says Ord Minnett. It suggests Metals X is hoarding cash for future production growth. Analyst Matthew Hope says directors are looking toward the Rentails tin-project in Tasmania reaching a final investment decision in 2027, and other possible targets. "While Metals X could become a growth stock, we cannot see imminent catalysts," Ord Minnett says as it downgrades the company to hold, from buy. "The Renison mine is steady state, Rentails project may reach final investment decision in 2027, and the permitting status of projects in companies where Metals X holds a strategic stake is unknown." Metals X ended last week at A$1.915, up 22% over the past month. Ord Minnett retains a A$2.00/share price target.(david.winning@wsj.com; @dwinningWSJ)

1830 ET - Aeris Resources looks cheap to Ord Minnett in an increasingly more expensive sector. Sentiment toward base metals has improved, supported by strengthening commodity prices. Aeris trades on an enterprise value-to-Ebitda multiple of 2x, well below the 3.7x multiple of peers, analyst Paul Kaner says. It adds the miner's balance sheet, featuring some A$165 million in cash and no debt, is supporting elevated investment in FY27. That positions the business for future growth. "At spot prices, we forecast FY27 free cash flow of A$69 million (9% yield), increasing to A$243 million (31% yield) in FY28 as Constellation comes online," Ord Minnett says. "In our view, continued operational delivery in FY27 should drive greater market recognition of this FY28 earnings and cash flow uplift." It retains a buy call on the stock.