Rudi’s View: Copper, Aluminium & Technology (!)

Rudi's View | 4:36 PM

This week’s updates on strategy and preferred stock picks.

By Rudi Filapek-Vandyck, Editor

As things stand, investors have three key issues to deal with for the year ahead:

• RBA tightening (the market is preparing for it)
• The return of cyclicals and commodities
• The ongoing promise (and build out) of AI

The first factor is probably why the local share market cannot get any sustainable momentum irrespective of the usual seasonal bias.

But market strategists at Wilsons assure us history shows the local market tends to grind higher during periods when the Federal Reserve is still lowering rates and the RBA starts preparing for rate hikes.

The combination does usually favour a stronger AUD and this in return usually translates into positive momentum for resources.

Wilsons' preferred large-cap exposures are copper, via Sandfire Resources ((SFR))), aluminium, via Alcoa ((AAI)), and gold via Evolution Mining (((EVN)) and Northen Star Resources ((NST)).

As an aside, Wilsons remains concerned about valuations for the major banks generally and would avoid domestic cyclicals (consumer discretionary, media and retail).

We'll talk more about factor two below. The third factor --AI-- is at this point something investors and strategists talk about outside of Australia, as any related share prices on the ASX remain deeply embedded inside a sectorial bear market.

I know, go figure!

Cyclicals and commodities is where all the present action and money flows are concentrating on, and this too is reflected in recent strategy and analysts' sector updates locally.

Metals and mining analysts at Barrenjoey further increased their pricing projections for the year ahead, while stating they have become more optimistic in comparison with earlier times in 2025.

The new uptrend is mainly supply-driven, but that doesn't make the overall enthusiasm, and upgrades to projections, any less material.

Barrenjoey has grabbed the opportunity to upgrade Paladin Energy ((PDN)) to Neutral from Underweight, but gold derivatives Northern Star ((NST)) and Predictive Discovery ((PDI)) have both been downgraded to Neutral from Overweight following steep share price performances.

The new forecast for bullion is 8% higher for 2026 to US$4,200/oz. Most other pricing projections went up more modestly, but most are positioned above current consensus, in particular lithium, base metals and met coal.