Mining companies rise after the proposed purchase of Anglo by BHP, but Meta and US data generate nervousness in the market

It’s a somewhat confusing morning in the markets. A possible acquisition of Anglo American by BHP drives increases in other mining stocks, but Meta hits technology stocks, and important figures from the US add a dose of nervousness.

Anglo American confirmed it received an unsolicited, non-binding offer from BHP. The offer values ​​Anglo at US$39 billion. If completed, it would be the largest operation among mining companies in a decade, and -possibly- only the first in a process of industry consolidation as its major players look to increase their copper assets.

Bloomberg calculations show that BHP, which controls Escondida, would dethrone Codelco as the largest copper producer in the world by adding Collahuasi’s assets in Chile and other Anglo holdings.

Anglo American shares advance 11.2%, while BHP shares lose 3.21%. Other mining companies such as Antofagasta (3.05%), and Freeport (0.52%) benefit from the expectations generated by the operation.

In the rest of the market, the behavior of the indices is also mixed. Shares in Asia fell 1%, hit mainly by the losses of the Nikkei (-2.16%). In the Japanese market, a currency intervention is expected until tomorrow, after the yen fell to a new low of 155.37 per dollar.

The European session sees most of its main indices fall, after a series of mixed results. Nestlé and Barclays disappointed with lower-than-expected results, while Deutsche Bank, BNP Paribas and Hermés reported figures above expectations. However, investors’ attention is on technology companies and the figures that the US will report in a few hours.

Meta shares fall 13% and drag the Nasdaq to a red opening. Copying Elon Musk’s script, Mark Zuckerberg asked investors for “patience” in the face of the increase in costs that an “aggressive investment plan” in Artificial Intelligence will mean, especially for its mobile applications. But while Tesla saw its shares rise 13% in yesterday’s session, after Elon’s speech, Meta has made the markets doubt the projections of other technologies.

Will the magnificent seven be able to soon show results for their million-dollar investments in AI? The key will be in the business models that accompany these investments. That is the question that Microsoft and Alphabet must answer today when they report their figures after the close of the session. Both companies have announced multi-million dollar investments in AI, and have begun its integration into their applications and service offerings for businesses.

Before the reports arrive, market attention will be focused on the US GDP figures. This is the first estimate for the first quarter and will include data on personal consumption spending inflation. The market anxiously awaits a slowdown in growth US economy, with a quarterly variation of 2.5% from the 3.4% recorded in the previous quarter. If the projection is correct, and in addition the unemployment benefits report shows an increase in applications, higher bets can be expected for a Fed rate cut in September.

Regarding the USA, The growing protests against Israel’s operation in Gaza are beginning to generate nervousness in Washington. The protests are concentrated on university campuses in New York, Texas and California; and they could play a key role in the electoral campaign.

Another political headline this morning comes from Spain. Prime Minister Pedro Sánchez raised the possibility of resigning, after a Madrid court initiated an investigation for influence peddling against Begoña Gómez, his wife. Sánchez accuses that the process is part of an “operation of harassment and demolition by the right and the extreme right.” Sánchez would announce his decision on Monday, and could trigger a new electoral process in Spain.

DFSUD highlights Brazil’s good momentum and reports that investors committed almost US$66 billion to that market in the first quarter alone. Yesterday the Brazilian government sent to Congress the regulations for the application of a tax reform that seeks to simplify the VAT. The changes introduce new rates for polluting vehicles, airplanes, minerals and oilcigarettes and sugary drinks, among others.

Financial Diary The headline warns that the Treasury faces million-dollar debt maturities in the next two years. Another headline reports that SQM Salar will absorb Codelco’s Minera Tarar and the operation arouses suspicion in Tianqi.

ATTENTION TO:

• Merck and Astrazeneca report ahead of the open. In the afternoon it will be the turn of Microsoft, Alphabet and Intel.
• 08:50 The business and political community meet at Enade 2024.
• 09:30 The US receives the first estimate of GDP for the first quarter. In addition, the weekly report on unemployment benefits and data on higher inventories and home sales for March are published.
• 11:00 In Argentina the consumer confidence index for April is published.
• 14:00 The US Treasury closes a week of record placements with the offer of 7-year notes for US$ 44,000 million.