UK macro data below expectations; Mining stocks firm

UK economic data released this morning makes grim reading. The pre-Brexit jitter is showing up in the GDP figures. ONS says December GDP growth is actually negative. This led to a minor drop in Sterling.

However, on commodity-related stocks, investors appear bullish. Two weeks ago, I highlighted the upside breakout in Rio Tinto (see here). This breakout was sustained and pushed further into 4,300p region (see Featured Chart). Interestingly, I noticed the entire large-cap mining sector is being chased after.

BHP Billiton, for example, is clearing its range resistance at 1,700p. And at the time of writing this morning, the stock is trading at 1,730p, thus affirming support at 1680-1700p and raising the possibility of another upside breakout at 1,800p.

For Anglo American, the stock is being capped by the round number resistance at 2,000p. This may check its advance for the time being. Still, AAL’s medium-term trend is distinctly bullish.

Overall, while the macro data is showing an economic slowdown, there are pockets of strength in the stock market.

 

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