Mining giants drag markets lower after China steel warning
MINERS led the FTSE 100 into the red yesterday without any help from Donald Trump or his furious North Korean rhetoric.
While global markets slumped on yet another day of apocalyptic bombast, investors were looking in the direction of China, which fired a warning shot that a current rally in metal prices may not be sustained.
The China Iron and Steel Association said that rising steel prices were “not driven by market demand or reduced market supply” and that the rally was “speculative”. China is the world’s largest consumer of metals and so what it says on the matter tends to get noticed.
Fears that iron ore – the main ingredient in steel, which is mined in vast quantities by the likes of Rio
Tinto and BHP Billiton
– might retrace from its current highs knocked stocks across the sector. Rio fell 109.5p to £33.70 while BHP dropped 39.5p to £13.36.
Anglo American also ranked among the biggest fallers of the day, down 39p at £12.39 – not helped by reports that two of its Australian coal mines had failed environmental compliance checks. Anglo’s fall also came despite winning back an investment grade rating from S&P.
Precious metals miners escaped the worst of the sell-off, however, with
Randgold ending the day flat at £74.75 and Fresnillo shading 2p to £15.51 as investors continued to back gold in their search for safe Results roundup havens. The precious metal hit a two-month high of $1,286.07 an ounce in London, up 0.7pc on the day.
Meanwhile, BP dropped 10p to 447.75p while fellow oil major Royal Dutch Shell
B shares shed 19.5p to £21.83 as the oil price slipped 0.5pc to $51.65 in late trading with the International Energy Agency saying oil supplies might not be as tight as previously thought.
The FTSE 100 index as a whole ended down 79.98 points, or 1.1pc, at 7,309.96, with Trump’s comments that he was “locked and loaded should North Korea act unwisely” weighing on European stock markets.
The blue-chip index got a short-lived boost in the afternoon when Wall Street edged higher on opening after a three-day sell-off, but the FTSE 100 failed to hold on to gains.
The FTSE 100’s dip might have been larger had it not been for sterling’s latest fall against the euro, with the pound slipping below €1.10.
A downgrade to “underperform” by Exane BNP Paribas left Dixons
Carphone nursing the second worst fall on the midcap FTSE 250 index, down 19p to 246.7p after the analysts said they were concerned about the retailer’s mobile phone business in the long term.
On the wider market, publisher Johnston Press jumped 1.88p, or 14pc, to 15p on news that a Norwegian investor is preparing to offer a lifeline to the debt-laden group behind the i newspaper, as revealed in The Daily Telegraph yesterday. The private equity firm Custos, which owns Sweden’s Metro freesheet, is planning to increase its stake in the 250-year-old publisher.