NEW YORK, Dec. 28, 2025, 1:26 p.m. ET — Market closed (U.S. equities; weekend)
Basic materials stocks are heading into the final trading stretch of 2025 with a powerful set of cross-currents: record-setting precious metals prices, fresh China policy headlines that matter for global demand (and supply risk), and a U.S. market backdrop defined by light year-end liquidity and an intense focus on the Federal Reserve’s 2026 rate path. [1]
Because U.S. stock exchanges are closed on Sunday, investors are using the pause to reassess what moved the sector into the weekend—and what could move it sharply when the next regular session begins Monday, Dec. 29, as portfolios rebalance and thin volumes can amplify price swings. [2]
Why Basic Materials Stocks are in focus right now
The basic materials sector sits at the intersection of commodities, global growth, and policy. That means it can act like a “macro dashboard”: when metals and chemicals rise, it often signals improving demand expectations—or supply constraints—or both. And when policy headlines turn protectionist, the sector can catch a “scarcity premium” even before company fundamentals change.
That dynamic was evident heading into the weekend. In the most recent U.S. session, Reuters reported that the S&P 500’s materials sector posted the biggest percentage gain among sectors in a light, post-holiday market. [3]
The last U.S. session: Materials led sector gains into year-end
Friday’s trade had the feel of a classic year-end setup: low volume, fewer catalysts, and a market hovering near record levels—conditions that can push investors toward sectors linked to “real assets,” inflation hedges, or cyclical catch-up. [4]
Reuters’ week-ahead coverage also pointed to market rotation away from crowded tech leadership and into other areas where valuations look more moderate. That’s historically constructive for parts of basic materials—especially diversified miners, metals producers, and select chemicals—because even modest inflows can move relatively smaller groups of stocks. [5]
Precious metals are driving headlines—and spilling into materials equities
The most dramatic story in the materials complex over the last 48 hours has been the precious metals surge.
Reuters reported that on Friday, silver breached the $77 mark and hit a record $77.40/oz, while gold reached an all-time high of $4,549.71/oz and platinum hit record highs amid expectations for Fed easing and heightened geopolitical tensions. [6]
That matters for basic materials stocks because record metal prices can lift:
- Gold miners and royalty/streaming firms (higher realized prices can expand cash flow, though costs and hedges matter).
- Silver miners and producers leveraged to industrial silver demand (solar, electrification, electronics).
- Platinum group metals exposure, which can influence certain global miners and PGM-heavy producers.
Just as important: the precious-metals rally is happening in thin markets, which can increase volatility for both the metals and the equities tied to them. Peter Grant, vice president and senior metals strategist at Zaner Metals, told Reuters that expectations for further Fed easing in 2026, a weaker dollar, and geopolitics are driving volatility in thin markets—while flagging the risk of year-end profit-taking even as the trend remains strong. [7]
Grant also laid out specific targets that traders will be watching into the new year, saying $80 silver is “within reach” by year-end and highlighting further upside objectives for gold—signposts that can influence sentiment in the precious-metals equity complex when markets reopen. [8]
The “silver shock” narrative is growing—and industry is paying attention
A separate, widely shared angle emerged Sunday: manufacturing sensitivity to silver prices. The Guardian reported that Elon Musk warned on X that rising silver prices are “not good,” emphasizing silver’s importance in many industrial processes, and noted concerns tied to new restrictions on silver exports from China beginning Jan. 1. [9]
For investors, this is a reminder that silver is not only a “store of value” trade—it’s also a critical industrial input. When the metal spikes, it can:
- Help silver-focused producers and some mining equities,
- Pressure margins for industrial users (electronics, solar supply chain, EV components),
- Reinforce volatility across the broader materials tape.
The Guardian also cited Tony Sycamore of IG describing the move as a “generational bubble,” while still pointing to demand and supply imbalance dynamics that investors should take seriously. [10]
Copper and industrial metals: record territory meets a demand debate
Precious metals aren’t the only driver. Copper’s role as the “electrification metal” keeps it central to the materials narrative—and it’s also tied directly to China policy and global growth expectations.
Barron’s reported that Comex copper tested fresh record levels recently, and highlighted a counterpoint from Capital Economics’ David Oxley: a key risk is whether Chinese demand fades as 2026 approaches, especially if the current “reflation” impulse cools. [11]
For basic materials investors, that tension—tight supply and electrification demand vs. potential China demand deceleration—is likely to remain one of the defining themes into early 2026.
China headlines in the last 24 hours: demand support signals, but trade tools sharpen
China remains the most important swing factor for many basic materials groups. Two China-related Reuters headlines in the last day reinforce why.
1) China signals more proactive fiscal policy in 2026
Reuters reported Sunday that China’s finance ministry said fiscal policies will be more “proactive” next year, reiterating emphasis on domestic demand, technological innovation, and strengthening the social safety net—an important point for materials traders because fiscal stance can influence infrastructure activity and industrial demand expectations. [12]
2) China strengthens “trade war” toolkit—with implications for strategic minerals
Reuters also reported that China passed revisions to its Foreign Trade Law aimed at strengthening its ability to wage trade war and curb outbound shipments from strategic minerals, among other measures, with the changes taking effect March 1, 2026. [13]
For basic materials stocks, this matters less as a day-to-day demand signal and more as a policy-driven supply-risk channel. Markets often price this kind of risk early—especially in battery and specialty metals—because supply disruptions can hit quickly, while new production can take years.
Battery materials watch: lithium demand risk enters the conversation
Another China-linked development could weigh on parts of the battery materials complex.
Reuters reported Sunday that demand for Chinese lithium batteries is expected to slump in early 2026, citing comments from Cui Dongshu, secretary general of China’s passenger car association, who pointed to an expected drop in domestic EV sales and slowing exports. Reuters also cited UBS analyst Yishu Yan warning this month that Chinese manufacturers face risks tied to U.S. restrictions affecting projects that receive investment tax credits and involve designated “foreign entities of concern.” [14]
For basic materials investors, this is a reminder that the “electrification boom” trade is not uniform:
- Some inputs (like copper) have broad-based grid and data-center demand.
- Others (like lithium and certain battery chain segments) can see sharper cyclical swings tied to subsidies, inventories, and export policy.
U.S. supply chain response remains part of the backdrop
In the U.S., the supply-chain theme in battery materials continues to build momentum. The Associated Press reported that amid a battery boom, graphite mining is getting renewed attention in the U.S., with companies seeking to restart or expand domestic production and policymakers emphasizing secure supply chains given China’s dominance in key graphite supply. [15]
Graphite matters to materials investors because it sits inside the basic materials ecosystem (mining and processing) and connects to both industrial demand and national strategy—two forces that can drive valuations.
Steel and construction materials: China capacity control still resonates
While daily headlines rotate quickly, China’s steel policy remains a major factor for global metals pricing. Reuters reported recently that China pledged to continue regulating crude steel output and prohibit illegal new capacity during the 2026–2030 period, with China’s state planner pointing to an insufficient supply-demand balance and the need for deeper supply-side reform. [16]
Even when this isn’t the “top story” on a given day, it shapes the baseline for steel and bulk materials. For U.S.-listed steelmakers and construction-material names, investors often translate China policy into:
- global price pressure (if exports surge) or price support (if output is curtailed),
- trade friction risks,
- and margin sensitivity in downstream industries.
The macro lens: rate cuts, the dollar, and year-end liquidity
Many of the latest moves in commodities are still being filtered through a familiar trio: Fed expectations, the dollar, and liquidity.
Reuters’ week-ahead report said investors are focused on when the Fed might cut rates further in 2026, and noted that the minutes from the Fed’s Dec. 9–10 meeting (due Tuesday) could provide more insight into the rate outlook—especially in a holiday-shortened, low-liquidity environment where price moves can be exaggerated. [17]
In precious metals specifically, Reuters connected Friday’s record run in silver and gold to Fed rate-cut expectations and a weaker dollar, while emphasizing the role of thin markets and volatility. [18]
What investors should know before the next session
With U.S. markets closed today, here are the practical catalysts and “watch points” that matter for basic materials stocks before Monday’s open:
- Watch commodities first, not just equities. Materials stocks often gap based on weekend moves in gold, silver, copper, and broader risk sentiment—especially when liquidity is thin. [19]
- Fed minutes are the marquee macro event this week (Tuesday, Dec. 30). The rate path shapes the dollar and “real asset” appetite—both critical to metals-linked equities. [20]
- China headlines can hit the sector fast. Fiscal support signals can lift demand expectations, while trade-law and export-control tools can raise supply-risk premiums in strategic minerals. [21]
- Battery-material names face a two-sided setup. China demand caution (for lithium batteries) can pressure parts of the complex, even as U.S. supply-chain investment themes (like graphite) continue to build. [22]
- Expect bigger swings in thin liquidity. Reuters highlighted that year-end portfolio adjustments can drive volatility, and low trading volume can exaggerate moves—especially relevant for cyclical sectors like materials. [23]
- Know the holiday calendar. Investopedia reported stocks trade a normal schedule on New Year’s Eve (Wednesday, Dec. 31), while U.S. bond markets close early at 2 p.m. ET that day; both stock and bond markets are closed Thursday, Jan. 1, 2026, for New Year’s Day. [24]
Bottom line for Basic Materials Stocks this week
Basic materials stocks enter the final days of 2025 with momentum helped by record precious metals, signs of rotation into non-tech areas, and renewed attention to China’s demand and trade posture. [25]
The key risk—and opportunity—into Monday’s open is that thin liquidity can turn commodity moves and policy headlines into outsized equity swings. Investors watching the sector should keep one eye on the metals tape and the other on Tuesday’s Fed minutes, while staying alert to China-driven demand signals and export-policy developments that can quickly reprice the “real asset” trade.
References
1. www.reuters.com, 2. www.reuters.com, 3. www.reuters.com, 4. www.reuters.com, 5. www.reuters.com, 6. www.reuters.com, 7. www.reuters.com, 8. www.reuters.com, 9. www.theguardian.com, 10. www.theguardian.com, 11. www.barrons.com, 12. www.reuters.com, 13. www.reuters.com, 14. www.reuters.com, 15. apnews.com, 16. www.reuters.com, 17. www.reuters.com, 18. www.reuters.com, 19. www.reuters.com, 20. www.reuters.com, 21. www.reuters.com, 22. www.reuters.com, 23. www.reuters.com, 24. www.investopedia.com, 25. www.reuters.com
