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Stocks Struggle; Iron Ore Collapse Hits Miners

By CMC Markets (Jasper Lawler)Market OverviewMay 10, 2016 08:15;-iron-ore-collapse-hits-miners-200128902
Stocks Struggle; Iron Ore Collapse Hits Miners
By CMC Markets (Jasper Lawler)   |  May 10, 2016 08:15
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UK and Europe

European stocks were mostly firmer on Monday, though a reversal in commodity prices erased much of the early gains.

Free-falling iron ore and copper prices are a serious headwind to FTSE 100 mining stocks. Shares of Anglo American (LON:AAL) crimpled as much as -12%.

Industrial metals dropped heavily last week and have added to losses on Monday. Chinese stockpiles of Iron Ore have risen to the highest in over a year after regulators clamped down on speculation within metals futures markets.

The latest Chinese trade data further softens the global growth outlook. A report in Chinese newspaper ‘People’s Daily’ is causing some concern amongst those wishing for Chinese stimulus to carry the global economy out its recent slowdown. An “authoritative person” has suggested China abandon the idea of loosening money conditions to accelerate economic growth.

The Greek parliament approving pension and tax reforms is one hurdle jumped before the indebted country can receives its next bailout tranche in time to pay debts due in June. A stalemate over “contingency measures” as well as the ongoing debate over debt relief suggests nothing will be agreed at a meeting with creditors on Monday.

Broker upgrades to AstraZeneca (LON:AZN) and Smith & Nephew (LON:SN) helped healthcare sector gains whilst travel and leisure firms TUI (LON:TUIT) and EasyJet (LON:EZJ) gained ahead of earnings this week.


US stocks were flat in early trading with Chinese growth, oil and corporate earnings all in focus as investors continued to digest the implications of last week’s payrolls data.

Shares of Lending Club tanked 25% after the peer-to-peer lending website said its CEO Renaud Laplanche had resigned for violating the company’s business practices.

Warren Buffet’s Berkshire Hathaway (NYSE:BRKa) dropped after the holding company missed top and bottom line estimates.

Facebook (NASDAQ:FB) shares were unmoved after the social network won a copyright battle in a Chinese courts. The legal victory could be a sign that CEO Mark Zuckerberg currying favour with Chinese officials is having some positive effect. Getting inside the great firewall of China would be very lucrative for Facebook but the company is conscious of public opinion surrounding censorship.


Dollar strength was concentrated in commodity currencies as metals prices from iron to copper to gold were crushed on Monday. The yen weakened after the Japanese finance minister said authorities were ready to intervene if yen moves became too volatile. It’s probably a fair assumption to say he was referring to downside volatility in USD/JPY.

German factory orders rose 1.9% m/m in March. The data has had little impact on the euro since more recent economic releases have shown a slowdown started in April.

The British pound unwound initial gains as Brexit rhetoric was stepped up a notch by PM David Cameron who suggested Britain exiting the Eurozone could lead to war.


Commodities as a pack came in for a royal drubbing on Monday. Weak Chinese trade data added to recent weakness brought on by a clampdown on commodity futures trading in China.

Output-limiting Canadian wildfires, a new Saudi oil minister and a report showing new oil discoveries at a 60-year low had been assisting higher crude prices since Friday. However, a collapse in dollar-denominated commodities took its toll on crude oil which fell in unison.

DISCLAIMER: CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.

No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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Stocks Struggle; Iron Ore Collapse Hits Miners

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Stocks Struggle; Iron Ore Collapse Hits Miners

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