STOCKSTOWATCHTODAY BLOG

Since the outbreak of war in Iran, the State Street SPDR S&P Metals & Mining ETF has tumbled. It dropped nearly 6% from Feb. 27, before the conflict began, through Friday according to FactSet data.

The

offers exposure to precious and industrial metals, as well as to the companies involved in mining them—including

Alcoa
Freeport-McMoRan

and

Newmont

“Mining companies are affected by rising energy costs,” BullionVault researcher Adrian Ash told Barron’s in an interview Thursday. Oil prices were hovering at near $100 a barrel early Friday, after several ships were recently attacked in the Strait of Hormuz.

“A huge part of any mining endeavour is the cost of energy, so oil and gas surges will always hurt mining stocks,” Ash said.

Then there’s the metal prices themselves. “Industrial metals have taken a hit as energy price shocks increase the chances of an economic slowdown… if people start buying less stuff, input demand to make that stuff [will fade],” Ash noted.

Continuous copper contracts

are down 0.5% over the past 5 trading days.

The price of

gold

has also edged down since the start of March, after hitting an intraday high of $5,626.80 per ounce on Jan. 29. Ash pointed out that “gold often falls when equities take a bath to cover losing positions on a trading book.”

Write to Alex Kozul-Wright at alexander.kozul-wright@barrons.com