Recently, the news of the Federal Reserve's interest rate cut made headlines, resulting in noticeable changes in the A-share marketFollowing the Fed's decision, indices began to show signs of recovery, with various segments, particularly the non-ferrous metal sector, experiencing significant gainsAnalysts suggest that the Fed's actions will enhance investment opportunities in sectors such as non-ferrous metals.

In the local context, on September 18, the Federal Reserve announced that it would lower the target range for the federal funds rate to between 4.75% and 5%, marking an unprecedented 50 basis point cut since 2020. This move was stronger than many had anticipated.

The day after this announcement, in the first trading session of A-shares, major indices rebounded

The Shanghai Composite Index, Shenzhen Composite Index, and ChiNext Index rose by 0.69%, 1.19%, and 0.85%, respectivelyAdditionally, the total trading volume across A-shares surged to 629.3 billion yuan, a 30% increase compared to the previous day.

Market commentators believe that the Fed’s interest rate cut will likely inject liquidity into the A-share marketHaitong Securities pointed out that this preventative measure by the Fed could aid in improving liquidity in A-shares; however, a continued focus on fundamental aspects is necessary to validate recovery in the medium to long term.

On September 19, various sectors showcased broad gains, with notable performances in non-ferrous metals, real estate, commerce, agriculture, light industry manufacturing, computing, construction materials, food and beverage, and steel

• Optimistic Outlook for Gold Prices in 2025
• Fed Cuts Rates 50 bps; Stocks See Upside
• Solar's Sustainability in Focus After Period of Growth
• Discussion on Interest Rate Hike in Wall Street
• China Boosts Domestic Insulin in Bulk-Buying Program

Among these, non-ferrous metals excelled with an impressive rise of over 3%, leading the sector gainsStocks such as Pengxin Resources, Jincheng Holdings, and Northern Copper all recorded strong rebounds, with Pengxin Resources hitting the ‘10cm’ limit up and continuing its momentum into the subsequent trading day.

This sector is primarily involved in metals like gold, copper, and cobalt, critical materials well-positioned amid the metals market's cyclical recoveryThis recovery was further illustrated by trends in individual stocks—since September 13, companies like Zijin Mining have seen their shares rise consistently, reflecting broader investor confidence in non-ferrous metals.

In the case of non-ferrous metal stocks, the relationship between rising prices and increasing volumes has driven overall performance improvements this year

For instance, examining the period from January to mid-May, the price of copper had surged nearly 30%, while gold contracts also reported a rise exceeding 14% in the first half of the year.

An analysis of 135 non-ferrous metal companies revealed that 87% had reported profits in the first half of 2023, with 62% achieving year-on-year growth in their performance metricsThe leaders in profitability included major corporations like Zijin Mining and China Aluminum, showcasing net profits exceeding 2 billion yuan.

For example, Guocheng Mining marked an impressive net profit gain of over 1,116% due to rising silver ore production and sales price increases compared to the previous yearSimilarly, Luoyang Molybdenum Company’s net profit grew by 670.43%, attributed to significantly increased production and sales of copper-cobalt products and effective cost management strategies.

In the face of these developments, companies are optimistic about the industry's prospects

Shanghai Construction stated that the interest rate drop would support investment stimulation, improve property valuation, and thereby enhance sentiments in the construction sector, coupled with reduced financing costs for businesses.

Furthermore, they remarked that historical patterns during such easing cycles often favor gold in longer-term investments, thereby positively impacting returns from mining sector projects.

From a macroeconomic perspective, entities like China Aluminum forecast modest recovery in global economic conditions through the second half of 2024, underpinned by an accommodating monetary policy environment that supports commodity price increasesThis expectation positions aluminum prices for further stability and potential upward shifts in the latter part of the year.

In light of the expansive growth within the non-ferrous metals sector, several stocks have gained increased attention from brokerage firms, seeing concentrated recommendations from analysts who predict significant upside potential

Notably, major players such as Zijin Mining, Zhongjin Gold, and China Aluminum have attracted multiple recommendations, with target prices suggesting over 30% appreciation from their latest trading levels.

For example, by September 19, analysts were targeting China Aluminum at 11.32 yuan, signaling over a 60% potential increase from the recent closing price of 6.98 yuanOther stocks such as Zhongjin Resources, Tianshan Aluminum, and Shenhua listed similar target increases exceeding 50% from their current values.

Hence, the convergence of a favorable monetary policy environment, combined with restructuring within the non-ferrous metals sector, illustrates a landscape rich with potential for growth and investment opportunities, making it a pivotal sector to watch in the upcoming trading period.