Investors pile into banks and miners, driving BHP shares to a record

Bank and mining companies have emerged as the stars of the first-half profits season, including market heavyweight BHP, who’s share price hit a record $54.75 on Monday morning.

The miner’s strong results, boosted by surging copper prices, led investment bank Morgan Stanley to raise its earnings forecasts for BHP by 5.6 per cent to $US2.53 ($3.56) a share for this year. The broker added that 83 per cent of miners reporting half-year profits this February beat expectations.

Analysts expect profit growth in the resources sector to thump the rest of the market this financial year thanks to surging gold, lithium, and copper prices pushing average earnings per share growth up 26.7 per cent in 2026. This compares to 6.8 per cent forecast growth for the banks and 4 per cent for the industrials sector.

Macquarie Group said a rush into miners, banks, miners and utilities is gathering pace as investors sell out of technology businesses because of uncertainty about whether new technologies linked to artificial intelligence may steal market share from them.

“Old economy sectors like utilities and materials are having a strong reporting season,” Macquarie’s analysts said. “Banks have also had a strong season, with earnings per share upgrades supported by Reserve Bank [rate] hikes.”

Gold shines

BHP’s switch in focus from iron ore to copper is being cheered by investors, although Morningstar analyst Jon Mills warned iron ore prices may slide from around $US100 per tonne today to $US75 per tonne over the medium term.

“Commodity demand is tied to global economic growth, particularly China’s. BHP benefited greatly from the China boom over the past two decades. China is BHP’s largest customer, accounting for roughly 60 per cent of sales in fiscal 2025,” Mr Mills said.

“But we think demand for many commodities is likely to soften as the China boom ends, particularly iron ore, which has disproportionately benefited from the boom in infrastructure and real estate investment.”

Gold prices climbed to a more than three-week high of $US5157 an ounce on Monday. In response, Australia’s largest dual-listed gold miner Newmont jumped 3.6 per on Monday to $173.58 to take its 12 month gain to 144 per cent on a market value of $188 billion.

While lithium bellwether Pilbara Minerals has jumped 110 per cent over the past year and Australia’s second-largest iron ore miner Rio Tinto hit a record high of $170.19 per share earlier this month.

Banking on winners

The shift in the share market pushed the S&P/ASX Materials sector 0.6 per cent higher on Monday to take its total advance to 32 per cent over the past six months, versus a horror 43 per cent tumble for the S&P/ASX Tech sector over the same period.

The financials sector - dominated by the big four banks and Macquarie - is up 3.5 per cent over the period thanks to better-than-expected profits from National Australia Bank, Australia & New Zealand Bank and the Commonwealth Bank this month.

“Driving the positive reaction to bank results was the combination of improving margins, booming credit growth and benign bad debts,” said Richard Schellbach an equity strategist at UBS.

Mr Schellbach added that Australia’s cyclically low jobless rate of 4.1 per cent in January is another positive for the lenders as it signals the local economy remains strong.

NAB shares hit a record of $48.73 on Monday, with ANZ Bank also hitting an all-time high valuation earlier this month.

“We believe the banks’ earnings per share upgrade cycle, strong balance sheets and low risk profile will continue to appeal to investors in the near term,” said Morgan Stanley.

“The combination of conservative risk settings, excess provisions, RBA rate cuts, and high levels of government spending have pushed loss rates well below the historical averages.”