What’s the outlook for ASX 200 mining shares in May?

How are things looking for ASX 200 mining shares in May 2022?

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Key points

  • Macquarie has given its outlook for ASX 200 mining shares
  • China stimulus and the war in Ukraine could be supportive for commodity prices
  • It rates most of the ASX's largest miners as buys

We’re already in May 2022. What is the outlook for S&P/ASX 200 Index (ASX: XJO) mining shares this month and beyond?

Mining businesses can have an important influence on both the ASX 200 and the Australian economy because of how big they are.

The ASX 200 has plenty of large miners including BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG).

It can be almost impossible to know what a share price will do in any given week, month or even year. But, analysts and brokers can make predictions about things like commodity prices and potential profit generation.

Analyst thoughts on ASX 200 mining shares

The analysts at Macquarie think that worries about the Chinese economy because of COVID-19 impacts could be an opportunity for investors to buy resource companies that have suffered a sell-off, according to reporting by The Australian.

Experts from Macquarie also believe that the Russian invasion of Ukraine will lead to bigger investments in ‘deglobalisation’, decarbonisation and defence. The experts believe that this should help commodity demand. Russian resources may be disrupted for some time after the actual war is over.

The positive outlook for commodities could bring institutional investors to the ASX looking for commodity opportunities, such as Capital Group.

The Australian quoted Bell Potter’s head of institutional sales and trading, Richard Coppleson, who said:

I suspect there is a wall of buyers of resource stocks on any pullbacks. Local institutions were I think looking to buy – most have held back and were waiting for more, just waiting until the dust settled – while Capital Group pounced hard just when it all looked dire and have done well.

Macquarie is expecting that China will expand its stimulus as the lockdowns end, with this giving support to commodities and ASX 200 mining shares.

The expert thinks that if it’s right about the outlook for resources, then the respective miners should “outperform” even in an economic slowdown, with support from China helping that.

The Australian also noted that outperformance by resource shares could also happen as interest rates rise, hurting valuations in other sectors like the technology industry.

Macquarie ratings on ASX 200 mining shares

Macquarie has an ‘outperform’ rating on the BHP share price, with a price target of $60.

The broker has an ‘outperform’ rating on the Rio Tinto share price, with a price target of $140.

The rating on Fortescue’s share price is ‘neutral’, with a price target of $20.

The Mineral Resources Limited (ASX: MIN) share price rating is ‘outperform’, with a price target of $85.

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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