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Rising commodities are lifting stocks, but not profits. That could be a problem

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The upcoming earnings season is unlikely to deliver, given the first quarter is often a weak period for metals producers and the recent gains in commodity prices won’t be reflected in the results

Commodity prices have been rallying over the past six weeks, but the share prices of major metals producers now face a couple of significant hurdles: high valuations and a challenging earnings season.are set to report their quarterly financial results on April 23. Teck Resources Ltd. will report its results on April 25, with Cameco Corp.

The continuing shift toward electrification and greener sources of energy, which requires huge quantities of copper and other metals, are buttressing commodities, while war and broader tensions in the Middle East are rattling energy markets. As for precious metals, gold briefly hit a fresh record high of US$2,384.50 an ounce on Tuesday, while silver has risen nearly 29 per cent over the past six weeks.

That puts a lot of pressure on these companies to produce profits that will justify the high share prices.

 

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