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New York - Anglo American [JSE:AGL] and Glencore [JSE:GLN] led a slump in mining stocks to the lowest in more than a decade as commodity prices tumbled on concern that China’s market turmoil will cut demand for raw materials.
The 80-member Bloomberg World Mining Index dropped as much as 3.8% on Thursday, with Anglo sliding as much as 11% to a record low and Glencore down as much as 7.9% in London. The Bloomberg Commodities Index dropped to its lowest level since 1999 as industrial metals and oil sank.
Investors are shunning metals amid more bad news on the economy in China, the world’s biggest consumer. Chinese stock exchanges halted trading on Thursday for the second time this week after China’s central bank lowered the currency’s daily reference rate by the most since August.
Equities have tumbled around the world as the weakening of the yuan fuels fears about the strength of the global economy.
The sharp weakening of the yuan “raises a lot of concerns about how the Chinese economy is tracking and what the central bank there is thinking”, Angus Nicholson, market analyst at IG Markets, said by phone from Melbourne.
“The People’s Bank and the big institutions there should have a much better insight than us, and the real concern is that things are worse than what is showing up in the data we see.”
The Bloomberg World Mining Index fell to the lowest since June 2004. Anglo was down 7.9% by 08:14 London time, after touching the lowest since at least 1999. BHP Billiton [JSE:BIL], the world’s biggest mining company, lost 5.3% and Rio Tinto Group fell 3.8% in London.
“It’s really difficult in this environment to see what can turn around a fairly strong trend of just constant negative news,” said Daniel Hynes, senior commodities strategist at Australia & New Zealand Banking Group. “I don’t think there is going to be any quick fix.”
