Morning Note: Market news and updates from Newmont and Atlas Copco.

Market News

Geopolitics continued to drive commodity prices. Brent Crude rose by 5% to almost $66 a barrel, reaching a two-week high, following the US announcement of sanctions on key Russian oil companies. Europe is set to move ahead with its own sanctions package, which includes a ban on Russian LNG imports. Gold drifted lower to $4,090 an ounce. Newmont Mining released strong quarterly results (see below).

The US-China trade situation remains fluid following reports the White House is readying an announcement on software-related exports to China covering an array of products items including laptops and airlines. There is some scepticism whether the US will implement such an action given the likely economic consequence. Trump is also talking up prospects of a deal with Xi at their planned APEC meeting this month. Trump terminated negotiations with Canada in a Truth Social post, criticising an Ontario-sponsored ad that uses Ronald Reagan speech excerpts to argue against tariffs.

US equities moved higher last night – S&P 500 (+0.6%); Nasdaq (+0.9%). Intel rose after hours following the release of better-than-expected results. The will now focus on this afternoon’s inflation data. In Asia this morning, equities were firm: Nikkei 225 (+1.3%); Hang Seng (+0.4%); Shanghai Composite (+0.6%). China needs a bolder spending package to mend the finances of households and companies, said Huang Yiping, a member of the PBOC’s monetary policy committee.

The FTSE 100 is currently 0.2% higher at 9,590, while Sterling trades at $1.3335 and €1.1480. UK retail sales rose by 0.5% in September well ahead of expectations for a 0.4% decline. The core figures rose by 2.3%. The recent fall in UK bond yields is tipped to save Chancellor Reeves £4.5bn if the OBR uses current market pricing. The 10-year currently yields 4.43%, down from its 4.8% peak last month.

Source: Bloomberg

Company News

Yesterday lunchtime Newmont Corp. released its Q3 2025 results which came in slightly above market expectations driven by the strong gold price and good cost control. The company continued to return capital to shareholders and reiterated its targets for 2025. The shares have been a very strong performer this year, although they have experienced some profit taking over recent days on the back of the falling gold price. In after-hours trade, they were down 5%.

Newmont is the world’s largest gold company and a producer of copper, silver, zinc and lead. This follows a transformational period during which the company bought US-listed Goldcorp for $10bn and Australia’s Newcrest Mining for $17bn. The company also entered into the Nevada Gold Mines joint venture with Barrick Gold – its 38.5% stake provides exposure to the single largest gold-mining complex in the world. In order to retain focus, Newmont has also divested of non-core assets – the company expects to receive more than $3.0bn in after tax cash proceeds from the divestiture programme this year including $2.5bn from divested assets and $900m from the sale of equity shares.

Newmont now operates a world-class portfolio of assets and prospects in favourable mining jurisdictions in Africa, Australia, Latin America & Caribbean, North America, and Papua New Guinea. The portfolio includes more than half of the world’s Tier 1 mines.

At the end of 2024, the company declared total reserves of 134m attributable gold ounces and resources of 170m attributable gold ounces. There is also significant upside from other metals, including more than 13.5m tonnes of copper reserves.

The company says that every $100 an ounce change in the gold price adds just over $500m to the group’s revenue. With the current gold price ($4,000+ an ounce) well above the company’s price assumption ($2,500 an ounce) and the expected cost of sales ($1,620 an ounce), Newmont should be able to generate significant cash flow over the medium term. As a result, the company provides an attractive way to gain exposure to the gold price, albeit with the operational and political risks that come with a production company.

In Q3 2025, attributable gold production fell by 15% to 1.42m ounces, driven by lower gold grades and planned shutdowns. The gold price has rallied sharply so far this year, driven by global geopolitical and macro-economic uncertainty, exacerbated by the Trump administration, continued central bank bullion buying, and concern over fiat currency debasement. During Q3, Newmont realised a gold price of $3,539 per ounce, up 41% versus last year.

The group’s direct operating costs are made up of labour (50%), materials & consumables (30%), fuel & energy (15%), and other expenses (5%). During Q3, total all-in sustaining costs (AISC) fell 3% to $1,566/ounce (and below the 2025 target) and, as a result, cash profits (EBITDA) increased by 68% to $3.3bn, while adjusted net EPS rose from 1.43c to 171c, well above the market forecast of 143c.

Capital investment fell 17% to $727m, although the company continued to progress major capital projects. The business generated a record quarterly free cash flow of $1.6bn, versus $0.8bn in Q3 last year. The company also received net cash proceeds of $640m from asset and equity sales in the quarter. This left the group in a near-zero net debt position with $5.6bn of cash and $9.6bn in total liquidity.

The company has repurchased $2.1bn of its shares since this year as part of the $3.0bn programme authorised by the Board through to October 2026 and declared a quarterly dividend of $0.25 per share. During the summer, the authorisation was raised by a further $3bn to be executed at the company’s discretion.

Newmont remains on track to achieve its 2025 guidance. Excluding the non-core assets held for sale, the group expects gold production of 5.6m ounces from the core Tier 1 portfolio. The company is making significant progress on the cost savings initiatives announced at the beginning of the year, enabling it to meaningfully improve its 2025 guidance for several cost metrics. All-in sustaining costs are expected to be $1,620 an ounce for the core portfolio. Sustaining capital expenditure (i.e. maintenance) is expected to be $1.7bn, with development spend of $1.3bn.

Source: Bloomberg

Yesterday lunchtime Atlas Copco released Q3 results which highlighted mixed demand, stable overall order intake, and strong cash flow. Although the group suffered a decline in profitability, the result was slightly better than the market expectation. Looking forward, the group expects customer activity will remain at the current level. In response, the shares, which are listed in Sweden, were marked down by 1%. We remain positive on the long-term outlook for the company as it is a quality compounder exposed to attractive growth trends.

Atlas Copco is a world-leading manufacturer of innovative compressors, vacuum solutions, generators, pumps, power tools, and assembly systems. The group has a diverse customer base made up of general manufacturing (22%), process industry (20%), electronics/semis (16%), construction (12%), auto (10%), and other sectors (20%). The products help the customer to increase operational performance, save energy costs, reduce contamination, cut down on failures in the field, lower noise levels, and extend service intervals.

As a result, the company provides exposure to a broad range of trends: demand for increased energy efficiency and reduced emissions; increased use of lightweight materials in transport industries; the transition from petrol to electric vehicles; increased use of demanding materials and production environments in processes for semiconductor and industrial production; increased production automation and smart factories; demand for improved ergonomics; and increased demand for digitally-supported service offers. Overall, the company will therefore play a role in the effort to reorganise and improve the resilience of supply chains, bring manufacturing closer to domestic markets, and increase automation in the face of higher labour costs or deteriorating demographics. Finally, over time the vacuum business should benefit from the expansion of the North American semiconductor manufacturing market.

The target is to increase revenue by 8% per annum, primarily through organic means, complemented by selective acquisitions of companies in or close to existing core competencies. The group operates an asset-light strategy – only components that are critical to the performance of the equipment are manufactured in-house. The company has integrated itself with its customers and can provide rapid and extensive services and support to their installed base of equipment. 36% of revenue (and 50%+ of operating profit) is generated from service (i.e., spare parts, maintenance, repairs, consumables, accessories, and rental). This is more stable than equipment sales and provides a strong base for the business and greater resilience in difficult times. The cost of the group’s equipment is low relative to the customer’s operating costs, and as a result, the company has strong pricing power, helpful when trying to pass on raw material cost inflation or tariffs. Atlas Copco is based in Sweden and reports in Swedish Krona (SEK).

The Wallenberg Family (through its holding company, Investor) is the largest shareholder of Atlas Copco, having overseen its entire history, and has a member on the Board. The business is run for the long term in a way that ensures it is passed on to the next generation in a better shape than it was inherited, with a focus on consistent operational culture, financial prudence, and sensible capital allocation.

During the third quarter of 2025, the overall demand for Atlas Copco Group’s equipment and services was mixed, and the overall order volumes remained relatively stable compared to both the previous year and the previous quarter. Revenue fell 3% in the quarter to SEK 41.6bn, a touch above the market forecast of SEK 41.3bn. In organic terms, which excludes M&A (+3%) and currency (-7%), revenue was up 1%. This was an improvement compared to the 2% decline in the previous quarter. Order intake was flat in organic terms at SEK 40.5bn.

Atlas Copco operates through four divisions or ‘Techniques’, with the performance in the third quarter as follows:

·       Compressor Technique (44% of 2024 sales): organic revenue rose 4%, while orders were flat. Order volumes for industrial compressors remained basically unchanged, while the order intake for gas and process compressors decreased.

·       Vacuum Technique (23% of sales): organic revenue and orders fell by 12% and 6%, respectively. Order volumes for vacuum equipment decreased somewhat, driven by weaker demand from the semiconductor industry.

·       Industrial Technique (17% of sales): organic revenue and orders fell by 5% and 7% respectively. The demand for industrial assembly equipment and vision solutions weakened, primarily due to lower investment activity among automotive customers.

·       Power Technique (16% of sales): organic revenue fell 1%, while orders rose 1%. Solid order growth was achieved for most types of power equipment, including portable compressors, portable pumps, and generators, whereas order volumes for industrial pumps remained essentially unchanged compared to the previous year.

Regarding tariffs, the company has previously highlighted that it has 18 production facilities in the US. They are working on a mitigation strategy, with short-term actions focused on pricing and supply adjustments.

Atlas Copco generates attractive margins, with gross above 40%, providing some shelter against rising raw material costs, and operating margin above 20%. In Q3, adjusted operating profit fell by 6% to SEK 8.86bn, slightly ahead of the SEK 8.68bn market forecast. The margin was down 60 basis points to 21.3%, due to increased costs related to trade tariffs and dilution from acquisitions. The return on capital employed during the previous 12 months slipped from 28% to 25% but is still well above the group’s 8.0% cost of capital.

The company has a robust balance sheet and continues to generate strong operating cash flow (SEK 7.3bn in Q3). Net debt reduced from SEK 16.7bn to SEK 11.1bn versus last year, while interest-bearing liabilities have an average maturity of 4.8 years. Financial gearing is a very comfortable 0.2x net debt to EBITDA.

The group continued to consolidate its industry with acquisitions, with six deals completed in the latest quarter. The dividend policy is to pay out 50% of net income. For 2024, the group approved a payout of SEK 3.00 per share, 7% higher than the previous year, equivalent to a 2% yield.

The group provided brief commentary on the near-term outlook, highlighting that it expects customer activity will remain at the current level.

Source: Bloomberg