Equities fall on global commodity storm

London – European stocks fell on Wednesday with miner Anglo American striking new historic lows as it languished at the centre of a global “commodity storm”, dealers said.

Markets had opened with slender gains after the previous day’s heavy commodity-fuelled losses, but stumbled once more as investors eyed a fresh collapse in Anglo’s shares.

A modest recovery in oil prices – with Brent crude bobbing back above $40 per barrel – was shrugged off by markets, which also remain anxious over China’s ongoing economic woes.

“This morning’s tentative gains look like they were a mere stop-gap, the brief calm before the resumption of the commodity storm,” said Spreadex analyst Connor Campbell.

He added: “Once again it is Anglo American leading the miners lower.

“With little to distract investors, it’s hard not to linger on the whopping 85 000 jobs Anglo is set to slash – and, of course, that suspended dividend.”

Anglo American struck a new all-time low at 277.6 pence. The stock later stood at 296.60 pence, down 8.36% from Monday’s close, but it still sat atop the FTSE 100 fallers’ board.

Anglo had revealed plans on Tuesday to slash its workforce from 135 000 staff to 50 000 after 2017, adding that it would suspend dividend payments until the end of next year in response to collapsing commodity demand and prices.

In reaction, Europe’s major markets sliding by about 1.5% on Tuesday.

And nearing midday on Wednesday, London lost another 0.2%, Frankfurt fell 0.4% and Paris shed 0.8% in value.

This week’s Anglo news has prompted heightened worries about the outlook for mining and metals companies across the world, dealers said.

“Equities (are) on another downer as the commodity sector remains under considerable pressure, the Anglo American dividend cut rippling through and generating uncertainty about income sustainability elsewhere,” said Mike van Dulken, head of research at traders Accendo Markets.

Steelmakers also faced more share price falls in Europe. ArcelorMittal shed another 2.4% in Paris, and ThyssenKrupp lost 0.9% in Frankfurt.

In Asia meanwhile, China’s ongoing economic woes cast a pall over the region’s trading floors after a downturn on Wall Street, but rising oil prices gave some respite for energy firms.

However, the oil market is still struggling around seven-year lows and analysts said the gloom was likely to last for some time.

“We believe that the current crude oversupply in the global market will persist over the coming years, reinforcing our flat outlook for oil prices over 2015 to 2017,” BMI Research said in a market commentary.

A global supply glut, weak demand and the growth slowdown in China have combined with soaring production to send crude slumping more than 60% over the past 18 months.

The Tokyo stock market closed 1.0% lower, Sydney fell 0.3% and Hong Kong lost 0.5%, while Taipei, Singapore and Kuala Lumpur were also in negative territory.

However, Shanghai rose 0.07 after a slightly better-than-forecast inflation reading for November, and on hopes of new stimulus measures for the world’s number two economy.

In foreign exchange activity on Wednesday, the euro climbed against the dollar.