Growing disconnect between rising share prices and falling commodities points to trouble around the corner

U.S. investors in particular rode what looked awfully like a relief rally after the solid falls of the previous three weeks, perhaps buoyed by news that the President, Donald Trump, might take his foot off the tariff accelerator.

A falling approval rating for the President, and a remarkable election result in Canada which was a vote against Trump rather than a vote for Canadian Prime Minister Mark Carney helped lower the political temperature.

But those off-market events can’t hide the facts that the 2.5% rise on the New York stock market, followed by a 1.5% rise in Australia, were posted even as the oil price dropped by 7.2% and copper fell by 6.3%, two commodities critical in a growing economy.

The problem with the disconnection between equity and commodity markets was magnified by weak U.S. data which showed a 0.3% contraction in the economy as exports were overpowered by imports thanks to U.S. businesses stocking up ahead of the full blast of Trump’s tariffs.

An early guide to what comes next can be found in shipping data which shows a global slowdown, especially on the China to U.S. route.

Another pointer is a warning from one of the world’s biggest investment groups Apollo Global Management which warned clients that some shelves in U.S. shops could soon be empty as Chinese made goods disappeared from the U.S. market.

Capping of a week when markets behaved like a dead cat bouncing slightly after falling from a high-rise building was a warning from the legendary U.S. investor Mark Mobius who told the Bloomberg news services that he had shifted 95% of the funds he manages into cash.

“Right now, we keep the cash and are ready to move when the time is right,” Mobius said, while hinting that he expects another six months of tariff turmoil.

For Australian investors, the next big event is the weekend federal election with polls pointing to the return of a Labor Government, possibly with Green party support, which could make investment decisions that little bit harder even as the Reserve Bank edges closer to an interest rate cut.

Gold, which has been the big beneficiary of Trump’s first 100 days of his second spell as President, ran out of steam this week despite a World Gold Council report that central banks continued to buy gold and inflows into exchange-traded funds rose by 170% in the March quarter to 552 tonnes, a three-year high.

High profile U.S. gold bug John Paulsen said he is confident that gold will reach US$5000 an ounce by 2028, a forecast he is backing up by investing directly in gold production in Idaho and Alaska.

On the Australian market, gold stocks held up reasonably well even as the price of their metal fell by US$150 an ounce to US$3229/oz and the Australian dollar gold price slipped back to A$5058/oz.

That near-record price, with the promise of more to come, explains why stocks such as Perseus added 4c to $3.40 with incoming cash flow over the last three months adding US$152 million to the company’s bank account which now stands at US801 million and close to the US$1 billion mark when liquid listed securities are added.

Perseus is not alone floating on a sea of cash, which explains why this week’s fall in the gold price is being treated by investors as a blip on an upward march in the gold price.

Other gold news and market moves this week included:

• Alkane Resources adding 4c to 79c after announcing a merger with Canada’s Mandalay Resources which owns gold and antimony mines in Victoria and Sweden. The merged business is expected to produce 160,000oz of gold a year, rising to 180,000oz in 2026.

• Bellevue Gold continued its recovery after sorting out its hedge book, rising this week by 2c to 89c with Macquarie Bank sticking with a buy tip and price target of $1.20.

• Northern Star paid a price for weaker than expected March quarter production and as it prepares to absorb De Grey Mining from next week, falling by $1.94 to $19.09 even as UBS stuck with a target price of $25.80.

• Catalyst Metals was sold down after a solid March quarter production report, shedding 75c to $5.63 while Morgans refreshed a buy tip and target price of $7.15.

• Regis Resources fell by 24c to $4.35 despite generating $221 million in March quarter cash flow.

• Gold Road also lost ground, down 15c to $3.04 as interest fades in a proposed merger proposal from South Africa’s Gold Fields. UBS has a price target of $3.55, and

• Westgold slipped 17c lower to $2.88 despite unveiling a plan to expand its Higginsville project in WA.

Copper stocks performed reasonably well against the background of a weaker metal price with Develop the sector leader as it started production from its Woodlawn project in NSW, adding 58c to $3.25 with the share price benefiting from a strong March quarter operations report.

Other copper news and share price moves included:

• AIC mines, down 1c to 34c despite a strong production report from its Eloise mine in Queensland. Bell Potter reckons AIC is heading up to 67c.

• Aeris Resources was up 0.5c to 19c after a reasonable March quarter of production at its Tritton mine in NSW with Macquarie expecting a strong June quarter to come which would justify its 28c share price tip and a 35c forecast from Bell Potter,

• Sandfire got an early boost in the week from its March quarter report which lifted the stock to $10.33 on Tuesday before the falling copper price dragged the stock down to $9.95, a fall of 7.5c for the week, and

• Hillgrove slipped 0.5c lower to 3.3c despite growing interest in its Kanmantoo mine in South Australia and a price forecast from CG Capital Markets of 8c.

Uranium stocks were winners from indications that the U.S. is likely to exempt the nuclear fuel from tariffs, boosting the yellowcake price by US$1 a pound to US$68/lb.

Boss Energy added 52c to $3.25. Bannerman rose by 37c to $2.39. Deep Yellow gained 15c to $1.13 and Paladin was 86c higher at $6.02.

Iron ore clung to a price of US$99 a tonne even as trade war speculation pointed to a fall in Chinese steel production.

Mineral Resources continued to shrug off its pall of negative publicity, rising by $2.40 to $20.50, possibly on its way to the $35 target price of Macquarie and Morgan Stanley.

Fortescue was 46c stronger at $16.08, well ahead of the $15.30 target from UBS and small producer Fenix added 0.5c to 29c.

Other news and market moves this week included:

• DY6 Metals rose by 5c (118%) to 9.4c after reporting high grade gallium at its Tundulu rare earth and phosphate project in Malawi with old drill core revealing assays up to 74 metres at 93.26 grams a tonne of gallium oxide and 1.56% total rare earth oxides from a depth of 72m.

• Nimy Resources was a local gallium winner, rising by 1c to 8.3c after reporting favorable mineralogy at its Block 3 discovery in WA.

• IGO shook off persistent sellers with a solid March quarter lithium production report which helped the stock rise by 15c to $3.82. Other lithium stocks went the other way. Pilbara was down 4c at $1.46 and Liontown lost 8c to 50c.

• Coal stocks had a solid weak thanks to ongoing strong demand for the fossil fuel. Whitehaven rose by 12c to $4.93 with Citi setting a target price of $7.40. Stanmore was up 6c at $1.95. Citi reckons it could go to $3.10, and

• Andromeda Metals rocketed up by 1.3c (93%) to 2.7c thanks to growing interest in its Great White kaolin project in South Australia.