Producers of metals and other raw materials fell, but only slightly, as traders hedged their bets on the implications of rising interest rates and inflation for the sector.
Consumer prices in the U.K. rose at the fastest annual rate in nearly three decades in December, echoing data in the U.S., Canada and elsewhere.
Inflation has mixed implications for the mining business, with upward pressure on wage and machinery costs offset by higher commodity prices. Higher energy prices could crimp aluminum smelter activity, said strategists at brokerage BNP Paribas, in a note to clients. Peruvian copper miner Antofagasta's profit margins are likely to decline in 2022 as costs increase more than realized prices, warned analysts at brokerage Jefferies.
The SPDR Materials Select Sector exchange-traded fund, which tracks the materials industry group on the Standard & Poor's 500, is down about 5% from its 2021 highs, a much more modest decline than growth sectors such as technology.
Write to Rob Curran at rob.curran@dowjones.com
(END) Dow Jones Newswires
01-19-22 1628ET
