Visitors pass a sign at the entrance to the offices of Anglo American in Johannesburg. The mining major’s shares fell 12.3% to 323.65 pence yesterday.
AFP
London
The global commodities rout sent world stock markets plunging yesterday, with mining companies under fierce pressure as Anglo American vowed to slash thousands of jobs.
In London, the FTSE 100 benchmark index ended the day down 1.4%, although BP crawled 0.06% into positive territory having earlier lost 1.5% while Royal Dutch Shell’s ‘B’ shares lost just 0.03% after earlier sliding 1.6%.
In Paris, where the CAC 40 closed down 1.6%, French peer Total shed 9.96%.
Frankfurt’s DAX index lost 1.5% with power giant RWE heading the losers column with a fall of 7.5% while troubled Volkswagen shed 2.5%.
Prices of key raw materials, notably oil and iron ore, crashed on demand fears, in particular from the world’s second biggest economy China.
Asian equities also sank on the back of collapsing oil prices, with sentiment hit by weak Chinese trade data, worries about the state of the world economy and ahead of an expected US interest rate hike next week.
“With iron ore hitting a 10-year low, hot on the heels of Monday’s seven-year low for oil, December’s commodity rout continued Tuesday,” said analyst Connor Campbell at traders Spreadex.
London’s mining sector tumbled with Anglo American dropping 12.3% to close at 323.65 pence after unveiling plans for a “radical” restructuring.
Anglo said it plans to slash its staff by almost two-thirds, from 135,000 staff to 50,000 after 2017, in response to collapsing commodity prices.
The company added it would further cut investment through to the end of next year by about $1.0bn (€921mn).
Rival Glencore lost 7% to 79.45 pence and BHP Billiton was down 5.5%—having earlier shed 8.4%—at 722.80 pence.
Rio Tinto—which has also outlined plans to slash 2016 spending to counter the impact of plunging commodities—saw its stock shed 8.4% to 1,893 pence.
Shares in steel giant ArcelorMittal slid 5.3% to €3.62 in Paris, while German rival ThyssenKrupp sank 3.6% to €17.7 in Frankfurt.
US stocks followed the downward trend. The Dow Jones Industrial Average stood mid session at 17,589.91 points, down 0.8%.
The broad-based S&P 500 fell 0.7% while the tech-rich Nasdaq Composite Index was off 0.2%.
The energy sector was also under pressure as Brent North Sea Crude dropped under $40 a barrel for the first time in almost seven years after the Opec refused to reduce record high output late last week despite oversupply.
For James Hughes, chief market analyst at GKFX, “it seems that whatever happens Opec will not budge and yet again have reiterated their stance that the ,markets will undo this mess themselves.”
Official data confirming that economic growth in the 19-nation eurozone slowed to just 0.3% in the third quarter also buffeted sentiment.
In foreign exchange activity, the euro edged higher against the dollar.
In China, investors were hit by more weak trade data indicating the world’s number two economy and key driver of global growth is heading for its worst year in a quarter-century.
The global oil supply glut, weak demand and China’s growth slowdown have combined with soaring production to send crude slumping more than 60% over the past 18 months.
But Capital Economics said all was not lost amid what it saw as “temporary headwinds.”
In its market assessment, the research consultancy indicated that “the November trade figures from China were not as bad as they appeared. The decline in exports reflected weak global demand, which we doubt will persist.”
