Arcelor Mittal tumbles as market edges lower

SOUTH African stocks edged lower on Friday, led by steel maker Arcelor-Mittal, which fell on a negative outlook despite returning to profit in the March quarter.

A strong majority for the ANC in Wednesday’s general election had little effect on prices as it had been widely expected.

However, Arcelor-Mittal fell 3.9% to R38.44 after it said that it expected higher second-quarter production costs and the market to remain subdued.

“The market probably views the positive results as unsustainable going forward. The results were good, but they were coming off a low base,” said Ryan Woods, a trader at Independent Securities.

The Top 40 index fell 0.36% to 43 741.10, and the broader All Share index slipped 0.36% to 48 852.45.

The mining index fell 0.56%, led by Anglo-Gold Ashanti, which slid 2.18% to R180.82.

The platinum sector strike rumbled into its 16th week, but producer Lonmin said that production could resume this week if enough workers responded to communications after a talks stalemate.

“The market is just resistant to do anything until we have some closure regarding the strike,” said Woods.

Global equity markets eased after record peaks this week.

Lower-rated eurozone bonds rallied after European Central Bank (ECB) president Mario Draghi gave his clearest signal yet that policymakers may act next month on inflation and to bolster a fragile economic recovery in the single-currency bloc.

Italian and Spanish borrowing costs fell to record lows after the ECB raised the prospect of it embarking on an asset-purchase initiative if inflation remained persistently low.

A measure of global equity performance, MSCI’s all-country world index, fell 0.48% after advancing on Thursday to its highest level since November 2007.

In Europe, the pan-European FTS Euro first 300 index fell 0.4% to 1 353.43 after hitting its highest level since May 2008 on Thursday.

On Wall Street, the Dow Jones industrial average fell 0.21% to 1 516.71. The S&P 500 lost 0.41% to 1 867.96, and the Nasdaq Composite dropped 0.6% to 4 027.011.

“We’ve been trapped in this trading range for several months now,” said Bruce Bittles, chief investment strategist at Robert W Baird and Company in Nashville, Tennessee. “All the excesses of 2013 are being unwound here in a very, very organised fashion where it’s not hurting the popular averages, but certainly individual stocks have paid a severe price.”

Brent crude for June slipped 7c to $107.97 a barrel.

Gold held steady at about $1 290/oz, underpinned by strong chart support, but remained on track to fall for a second week as the dollar took support from euro weakness and traders awaited news on Ukraine. Silver was up 0.1% at $19.14/oz. Spot platinum was down 0.5% at $1 426/oz and spot palladium was down 0.1% at $799.90/oz. —