The strong third-quarter results of the US economy have alleviated concerns regarding demand, leading to an increase in the share prices of metal and raw material producers. The Commerce Department reported a growth rate of 4.9% for the Gross Domestic Product (GDP) in Q3, more than double the pace seen in Q2.
The market is now grappling with the tension between positive economic data and the potential impact of higher interest rates and a more restrictive Federal Reserve. Brian Rose, senior US economist at UBS Global Wealth Management, explained that this contrast is likely to create volatility in the market until investors are confident that the economy is cooling without collapsing and the rate shock has subsided.
Despite a decline in its third-quarter net income, gold miner Newmont saw an increase in its share price as the company announced that its acquisition of Australian rival Newcrest Mining is scheduled to close on November 6. The price of gold futures has been on a recent upward trend, outperforming the broader S&P 500 stock index for the year so far. Gold has traditionally been viewed as a safe-haven investment during times of economic turmoil and conflicts, and in 2023, it embodies both.
On the other hand, aggregate supplier Vulcan Materials experienced a decline in its stock price due to concerns about a potential slowdown in economic growth. Despite this, the company remains optimistic, stating that heavy-industrial activity will offset any deceleration in residential construction, resulting in earnings growth in 2024.
