Live Markets: Mining stocks: MS sees room for re‑rating despite energy shocks

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30/03/2026 12:30

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MINING STOCKS: MS SEES ROOM FOR RE-RATING DESPITE ENERGY SHOCK

European metals and mining stocks have sharply de-rated as investors worry about a conflict-driven energy shock colliding with rising recession risks.

A basket of basic resources shares .SXPP is down more than 11% over the past month, versus a roughly 9% fall for the STOXX 600 .STOXX.

Morgan Stanley says that while higher energy and supply-chain costs are clearly a headwind, margins matter more than inflation - unless price rises become "demand destructive".

"Margins hinge more on commodity–market tightness than

inflation" the bank says, adding that recent valuations look more consistent with a slowdown than a balance‑sheet stress event.

Higher fuel, freight and insurance costs are already lifting miners' cost bases and amplifying demand concerns, but MS argues that higher costs are "not inherently bearish".

Looking at past conflicts, share-price performance was mixed, with demand resilience the decisive factor. In tight markets, pricing power supported margins despite rising costs, it says.

If commodity balances remain tight, MS expects mining stocks to re-rate once macro de-risking fades. In a weaker macro backdrop, it favours low-cost assets and resilient cash flows.

Glencore, Rio Tinto, Norsk Hydro and Endeavour Mining are flagged as better positioned.

(Lucy Raitano)

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