JPMorgan Chase has made significant predictions and adjustments concerning the global market, especially focusing on refined copper and the European defense sector. Latest insights suggest the global deficit in refined copper is set to climb to 160,000 metric tons by 2026, with the bank forecasting copper prices to average around $11,000 per metric ton next year. This forecast was detailed in a note issued by JPMorgan on Friday.
The report connects these projections to the recent actions taken by the Biden administration. Following President Donald Trump’s earlier decisions, the U.S. government is examining potential tariffs on copper imports, with JPMorgan predicting these tariffs could reach at least 10%, possibly even rising to 25%. Analysts believe these tariffs will contribute to a build-up of excess inventory within the U.S. as producers and importers prepare for the increased costs, potentially resulting in supply shortages elsewhere around the world.
“Likely excess inventory builds in the U.S.… set up the potential to leave the rest of the world shorter of copper,” noted the bank, hinting at how these dynamics could drive prices up significantly toward the latter half of 2025, predicting $10,400 per metric ton as more realistic. This tightening supply forecast is amid a backdrop of declining demand growth from China, projected to slow from 4% last year to 2.5% this year, which the bank described as the “greatest downside risk” to their copper market forecasts.
Adding additional perspectives, the International Copper Study Group confirmed substantial market alignments, showing the global refined copper market experienced a notable 22,000 metric ton deficit last December, compared to the much larger 124,000 metric ton deficit noted the month prior.
Meanwhile, JPMorgan expands its outlook on defense stocks, raising target prices, particularly amid the backdrop of a rearmament trend seen across Europe. The financial institution increased their price target for the German defense contractor Rheinmetall significantly, from €800 to €1,200. Analyst David Perry remarked on the heightened urgency many NATO states may feel to boost their military budgets, following recent geopolitical tensions.
“The rearmament roll-out across Europe isn’t theoretical anymore; it’s reality,” stated Perry. Citing heightened military expenditures announced by Denmark and the U.K., alongside Germany’s proposed €200 billion special defense fund, Perry forecasts solid growth for defense-related stocks. He observed, “We expect many NATO members to prioritize defense funding, positively impacting stock valuations for companies within this sector.”
JPMorgan has made significant adjustments across many European defense firms, boosting target prices by about 25%, implying confidence about impending budget expansions. Among notable adjustments are Babcock’s price target rising from £760 to £900, along with BAE Systems, IMI, Qinetiq, and Rolls-Royce, all being assigned 'overweight' ratings by the bank. The adjustments come as many nations reassess their military needs after decades of relative neglect.
Outside of raw materials and defense, JPMorgan also augments its outlook on the investment management sector, upgrading Partners Group from 'neutral' to 'overweight'. The firm emphasized its potential for substantial growth propelled by increasing allocations toward private markets from high-net-worth individuals. They foresee assets under management to achieve double-digit growth again by 2025, estimating a compounded annual growth rate of 14% from 2024 to 2028.
“With 23% of Partners Group's assets under management currently within private wealth, the firm’s partnerships and extensive distributor network also position it favorably within this competitive market space,” JPMorgan highlighted. Following this announcement, shares of Partners Group saw positive market reactions, climbing by 2.7%, leading to their best trading day since November 2024.
Overall, the adjustments made and forecasts issued by JPMorgan lay out a clear pathway of optimism, from copper industry forecasts to defense spending trends and private wealth management. With many macroeconomic variables at play, investors are advised to closely track these developments for insights on how the market may evolve, particularly amid fluctuatory shifts resulting from governmental actions and global demand dynamics.