ASX Trader: Eerie signs suggest Aussie giant’s stocks are set for major move

It’s the heartbeat of Australian materials and is showing eerily similar signs to the last time its stocks went ballistic. And this time, there’s even more reasons to be excited, writes ASX Trader.

After four years of grinding sideways, the ASX Materials Index (XMJ) has finally broken out of its consolidation range, a move that could mark the beginning of a major cyclical advance.

Technicians often refer to these long consolidation patterns as “energy storage zones.”

The longer a market trades within a defined range, the more significant the breakout tends to be once that range is resolved.

In this case, the materials sector’s breakout from its four-year base is not just bullish, it’s extremely bullish.

With global inflation stabilising, interest rates likely peaking, and capital beginning to flow back into commodities, the timing couldn’t be better.

Historically, a decisive breakout following years of accumulation has marked the start of multi-year runs in the resource sector.

The materials sector is on the verge of a big move.

The Giant in the Room: BHP

No company captures the heartbeat of Australia’s materials sector quite like BHP Group Ltd (ASX: BHP) the world’s largest diversified miner and a bellwether for global resource sentiment.

We’ve seen this roadmap before.

Back in the 2000s, BHP had a beautiful break and retest, followed by years of quiet consolidation… and then it went absolutely ballistic.

Fast forward to today and the setup looks eerily similar.

After spending years building a wide accumulation base, BHP has broken through major resistance levels with strong volume confirmation.

From a technical standpoint, this kind of structure, a long base, rising momentum, and renewed relative strength against the ASX200, is textbook early-stage bull-market behaviour.

For context, around 45 per cent of BHP’s revenue now comes from copper, and copper itself is setting up for a major move.

Here’s why that matters: As money rotates out of precious metals like gold and silver and into industrial metals, copper is next in line. The market always moves in cycles one sector leads, then another follows. And right now, it looks like copper’s turn is coming.

BHP’s set up is looking eerily similar.

Why copper is the real catalyst

Copper has earned its nickname as “the metal with a PhD in economics,” and right now, the doctor is bullish.

Global copper inventories are at multi-decade lows, while supply growth continues to lag the accelerating demand from electrification, data centres, and grid expansion.

Every electric vehicle, solar installation, and battery system depends on copper and that demand is only compounding.

Add to that a wave of mine depletion, project delays, and permitting challenges, and the result is a perfect storm of constrained supply meeting structural demand growth.

Analysts are already forecasting potential deficits from 2025 onwards.

BHP has a huge stake in the copper game.

The Macro Picture: Why copper’s tailwinds are “huge”

From a big-picture perspective, the macroeconomic environment for copper is extremely bullish and it’s worth understanding why in simple terms:

• Demand is rising rapidly as the world electrifies.

• That demand is inelastic, meaning, even if prices rise, industries still need copper.

• Supply is limited, and ramping it up isn’t easy.

• New copper mines take 10 to 15 years to move from discovery to full production.

It’s a classic setup: growing demand, tight supply, and long lead times. That’s why many analysts see copper entering a potential multi-year bull market.

We saw similar macro conditions with silver back in 2015–2016, but there are some key differences worth noting:

1. Copper is a primary resource for miners unlike silver, which is mostly produced as a by-product of mining other metals.

2. Copper isn’t hoarded as a “monetary metal”, meaning it’s produced and consumed as needed, leaving very little above-ground surplus. When shortages appear, there’s no buffer.

3. The copper market is less distorted by speculative short selling, its price is largely driven by real industrial demand.

For investors willing to look through the short-term noise, the long-term tailwinds are Huge.

The copper supply forecast.

A technical and structural bull market

From a technical perspective, both the materials index and BHP are displaying early-cycle accumulation breakouts the kind of moves that tend to lead, not follow, broader market upswings.

If history is any guide, the last time the sector broke out from a multi-year base was in 2003 which was the beginning of a decade-long commodities supercycle.

While no two cycles are identical, the combination of structural demand, tight supply, and technical confirmation suggests we may be seeing the first chapter of another one.

For long-term investors, this isn’t the time to chase headlines, it’s the time to understand cycles.

The smart money accumulates when no one’s looking; the rest take notice after the breakout has already occurred.

The materials sector has awakened from its four-year slumber. BHP’s copper exposure positions it as one of the best-placed large caps for the next leg higher.

With both the charts and the macros aligned, the setup for the next few years looks nothing short of extraordinary.

Originally published as ASX Trader: Eerie signs suggest Aussie giant’s stocks are set for major move