U.K.-listed Anglo American PLC was the second-worst performer, falling 6.9%, while Anglo-Australian miners BHP…
Advertisement
In London, the FTSE 350 mining index lost 2.5%.
United States blue chips ended off their lows but still shed around 1 per cent overnight impacted, by a sell-off in commodities on the China worries and by falls from carmakers and suppliers in reaction to following the German giant Volkswagen’s emissions scandal. The Fed’s decision sparked renewed fears over the sluggish pace of global growth and has left investors second-guessing when the first rate move will come.
“The on-going slump in commodity prices is certainly driving a large slice of the losses in London, but further afield it’s vehicle manufacturers that are under pressure amidst concern as to just how widespread the issue of incorrect emissions readings as posted by Volkswagen may yet prove to be”. Meanwhile the price of zinc, a major metal for Glencore, fell to a more than six-year low of $1,640 a ton on Tuesday.
Major basic resources names were in the red on Tuesday after Credit Suisse (Swiss Exchange: CSGN-CH) downgraded its outlook on a few of the stocks in the sector.
Jason Hollands, a managing director at private client investment manager Tilney Bestinvest, said: “Fears about the slowdown in China’s rate of economic expansion remain firmly at the epicentre of equity market weakness as China, the world’s leading manufacturing economy for two decades and a voracious consumer of raw materials, is the key lever in setting demand for commodities”. Glencore fell to its lowest level since it floated at 530p a share in 2011, down to 99.5p, before recovering to 106.35p, still down almost 11% on the day.
The mood is particularly bleak at the Denver Gold Forum, an annual mining conference this week. “Glencore, in particular, doesn’t have the quality of assets that some of the others do”.
Shares in Thomas Cook rose 4.1% after the travel company said it was on track to meet full-year profit targets. All of the share price gains made since the company’s debt-reduction plan was announced have been wiped out.
“Glencore is more leveraged, somewhat higher cost than the other producers such as BHP”.
“It’s too big a move”, said Liberum Capital analyst Ben Davis.
Advertisement
He added: ‘That said, yesterday’s shake-down of the market was brutal, especially given it was based on sentiment as opposed to outright fundamentals, but it’s clear that the volatile conditions we saw earlier last month are still very much in play’.
