RBC Capital upgrades Antofagasta, says risk/reward improving

The bank noted that Antofagasta has de-rated in recent months and is now back close to its five-year average ratio to the Stoxx 600.

"A confluence of events, including risks to 2024 copper balances, resilient demand from China and now the Fed pausing leave us with a more neutral view on ANTO and as such we upgrade our rating," it said.

RBC said that following Antofagasta’s underperformance versus the sector, it now sees a better risk/reward for the shares.

"Although copper demand and economic indicators in the West continues to weaken, China's demand is remaining more resilient and indicators like premia and inventories could provide some near-term price support," it said.

"In addition, the end of the US Feds rate hike cycle could be another positive - we note that during the three months following a pause in the (eventual) peak rate that copper prices have been up 6.8% in the last three rate cycles (although caution as they've been down 2.9% looking out over 12 months)."

RBC said one of the reasons why it values Antofagasta at a premium is due to its position as a pure-play copper company, with strong management "in a (usually) relatively safe jurisdiction".

"The recent challenges at First Quantum's Cobre Panama are likely to reinforce this benefit, but also, should the situation there deteriorate further, that could also remove our expected copper surplus for 2024," it said.