Miners spooked by China slowdown
MINING stocks tumbled on the FTSE 100 yesterday as concerns of an economic slowdown in China were re-ignited by stuttering industrial production in the Asian powerhouse.
Industrial output growth, which underpins demand for base metal and their prices, slowed in August to 6pc.
London’s miners reliant on a strong Chinese economy slumped alongside metal prices, as the joint-worst industrial output figure in 20 months played into fears that economic activity in the world’s second largest economy is decelerating.
A marked easing in infrastructure investment was the main culprit for the slowdown, according to Capital Economics’ China economist, Julian Evans-Pritchard. “The decline was driven by private firms, who appear to have been hardest hit by the government’s efforts to cut industrial capacity,” he explained, adding that China’s economy will suffer in coming quarters from the government front-loading fiscal spending this year and tighter monetary conditions.
After rallying during the summer, copper prices suffered a third day of decline, slipping 1.3pc to $6,457 per ton, a four-week low. Jittery investors pulled out of huge miners exposed to the Chinese economy with Rio Tinto weighing heaviest on the FTSE 100, slipping 124.5p to £35. Rivals Glencore and BHP Billiton weakened 12p to 351.6p and 47p to £13.62, respectively, while Anglo American outperformed its peers, dipping just 32.5p to £13.17.
The pound’s surge after the Bank of England surprised markets by giving its strongest hint yet that it will hike interest rates punctured the blue-chip index already treading water. Also weakened by a spate of individual fallers, the FTSE 100 retreated 84.31 points to 7,295.39. Experian dived 74p to £14.59 on a read-across from troubled US rival Equifax as Democratic senator Mark Warner asked the Federal Trade Commission to investigate the credit-reporting agencies’ cyber security defences. The probe into the huge data leak at Equifax, which included details on 143m Americans, was widened to include Experian yesterday afternoon with Republican Carolyn Maloney sending a letter to the company asking what steps it had taken to protect consumers’ data.
Retailer Next, a rare bright spot in London, skyrocketed 577p to £49.94 on a brighter outlook following a challenging first half of 2017, pulling up peers Marks & Spencer and Debenhams 9.1p to 333.6p and 0.5p to 42p, respectively. On the FTSE 250, Spire Healthcare crashed 57.7p to 252.2p, a 19pc plummet, after cutting its guidance on softer NHS referral figures, with blue-chip peer Mediclinic International, which has a 30pc stake in Spire and is persistently linked with a full takeover of the company, dropping 23.5p to 711p.