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Uranium Prices React & the Hikes Won't Stop

4 June 2023

Uranium Prices React & the Hikes Won't Stop
Uranium Prices React & the Hikes Won't Stop

This last week has been really encouraging to end the month of May, comfortably outperforming the FTSE 100 and the average investor on the platform.

This performance has been thanks in part to a strong rally in the uranium stocks in the portfolio, driven by a sharp rise in the price of uranium on Thursday. This is on the back of news that the United States Senate has approved a bill to fast track the deployment of a new fleet of advanced nuclear reactors.

This is important news and is another huge positive signal towards adoption of nuclear as a clean energy source.

Despite the strong rally, which could certainly be a good exit point, I am looking to hold onto my uranium stocks as I feel there is more to run. The news from this week is only further confirmation of my longer term thesis on uranium.

The rest of the portfolio has been supported by the resolution of the US debt ceiling stand off and the strong job numbers coming from the US at the end of the week. In my opinion, the agreement on the debt ceiling was an inevitability and was somewhat confused about the market nervousness from the past weeks.

On the job numbers side, these strong figures to me only signal further tightening from the Federal Reserve. Inflation remains high, and whilst job numbers remain as they are I see no chance of any rate cuts. I am firmly of the opinion that a few more rate rises are on the horizon.

This backdrop does however signal to me there is pain to come. You are starting to see weak numbers coming from certain areas of the economy, in some parts of retail and industrials. My impression is that the recession is already here despite job numbers, and the Federal Reserve will be hiking (or at least maintaining rates) into a significant slowdown.

I am broadly comfortable with the composition of the portfolio, being weighted towards emerging market commodities and European luxury names which I am opportunistically adding to on weakness.

Recent falls in the copper price have seen me increase my positions in Glencore and Antofagasta, both of which look like good value in the longer run as the longer term copper price dynamics I believe to be encouraging. Falls in prices of luxury stocks over the last two weeks has seen me add Moncler where I have already made a +4.5% gain.

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