As I’m sure you’re aware, this week has been a particularly busy one for central bank policymakers, while we’ve also been closely watching commodities following last week’s calamitous showing from Crude Oil. Yet at the end of this week, few would have predicted the biggest winner would be the always popular Mining sector. Having been on the receiving end of a torrid few weeks, without any sign of improvement in the near future, it came as a shock for many to see all five of the top performing stocks on the UK 100 this week were from that sector.

So how can one of the most traded and heavily weighted sectors spring such a surprise and, perhaps more importantly, how much further can their rally go?

It fell upon a driver that has been well and truly in the foreground for investors since the EU referendum last June – the influence of foreign exchange markets – for the recovery for miners to come about after a tough fortnight. Weaker than expected Chinese data, a continuing tug of war between US crude oil producers and OPEC, and still no sign of the Trump administration’s monstrous infrastructure spending plan were all working against the sector.

Many had expected Federal Reserve members at their Wednesday meeting to raise their forecasts for the rate of monetary policy tightening, in turn instigate a rally in sectors with a financial focus, in particular the banks. When policymakers failed to do so, the USD suffered and bargain hunters, smelling an opportunity to purchase commodities at a relative discount, quickly amassed as much as they could despite the potential headwinds mentioned above.

What is surprising for many has been how quickly the fortunes of some miners have turned around and the strength of the subsequent rally that has ensued. In fact, three of the top five performers this week were in the bottom bracket only a week ago: Anglo American (AAL) (-9.4% last week versus 13.8% this week; +8.5% Thurs), Antofagasta (ANTO) (-7.0% last week versus +14.5% this week; +4.7% Thurs) and Glencore (GLEN) (-7.3% last week versus +11.0% this week; +4.8% Thurs).

And yet some potential upside remains. Copper, the primary product produced by both Antofagasta and Glencore, still has another 4.5% before reaching its 2017 highs while Anglo American’s commodity of choice, Iron Ore, is still 7% below this year’s highs, has even further to go.

The rally in the mining sector has provided a significant contribution to the UK 100 ’s fresh all-time highs achieved this week (more on that here) which bodes particularly well for the index at a time when many are hesitant to provide bullish arguments on its future.

In a week in which the prospect of a second Scottish referendum became a reality, while Brexit and European elections loom in the not so distant future, the fact that the UK’s blue chip index can reach yet another all-time high suggests that perhaps the nay-sayers may be eating their words in the weeks and months to come. And with the performance that we’ve seen this week, who am I to say that there isn’t sunshine, rather than a thunderstorm, on the horizon?

As always, it’s my job to analyse the facts and figures during a particularly busy time for global markets so that our clients can make informed, smart and profitable decisions. Why spend your trading hours sifting through troves of data, only to see attractive trading opportunities fly past? Leave it to us at Accendo Markets by signing up here to receive our research for two weeks without paying a penny.

Enjoy the rest of your St. Patrick’s Day and weekend,

Henry Croft, Research Analyst, 17 March