Global Mining Stocks Plunge on Fed, China Demand Fears – by Alex MacDonald and John W. Miller (Wall Street Journal – September 22, 2015)

http://www.wsj.com/

Fed’s decision not to raise interest rates also renewed fears over sluggish pace of global growth

LONDON—Mining company stocks plunged across the world on Tuesday on continued fears that China’s economic slowdown would cause metal prices to tumble further.

The carnage was most apparent at Switzerland-based trader and producer Glencore PLC, where shares fell below £1 ($1.55) for the first time, down more than 16%. The beleaguered company’s shares recovered slightly but closed down 10%.

But Tuesday’s tumble was another hammer on the head of almost all mining companies.

Freeport-McMoRan Inc., the biggest American miner, lost almost 1.5% of its value in afternoon trading in the U.S. In the U.K., Anglo American PLC fell 6.73%, while Anglo-Australian miners BHP Billiton Ltd. and Rio Tinto PLC ranked among the 10 biggest losers in London trading.

In London, the FTSE 350 mining index lost 2.5%. In Toronto, a major center for mining finance, the stock market’s materials index—home to miners of gold, copper and potash, among other commodities—was down 4.2% on the day, bringing its 12-month drop to 30%.

The losses were an extension of a pattern of market volatility since the U.S. Federal Reserve said on Thursday it wasn’t raising interest rates this month. The Fed’s decision sparked renewed fears over the sluggish pace of global growth and has left investors second-guessing when the first rate move will come.

Miners also have been roiled by a long rout in commodities prices, with gold, copper and iron ore trading at multi-year lows in recent weeks on worries that demand is slackening in China, the world’s biggest consumer of many raw materials.

On Tuesday, there were widespread worries that data to be released late Wednesday will show a continued decline in Chinese factory activity.

The copper price, the largest earnings driver for Glencore and Freeport-McMoRan, led a group of metals’ prices lower in afternoon European trading, falling 3.6% to $5,036 a ton. Meanwhile the price of zinc, a major metal for Glencore, fell to a more than six-year low of $1,640 a ton on Tuesday.

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