Hitting risk sentiment, Glencore shares fell to a record low at the start of the week on concerns over the company’s ability to withstand a prolonged decline in prices of metals.
“We expect volatility to remain elevated as Asian policy makers struggle with regional deceleration in growth, and yet more weeks and months of debate over the Fed policy outlook”. Tokyo was down 4.05 percent at the close, while Sydney shed 3.8 percent. Tokyo closed more than 4 percent lower, while Hong Kong’s Hang Seng fell 3 percent – its lowest close since July 2013.
Markets in New York and Europe were equally sideswiped. Brent Crude, a benchmark for global oils, was up 53 cents to $47.87. Prices of aluminum fell 0.5% to $1,545 per ton and zinc, which is used as an anti-corrosive for steel, hit a five-year low of $1,617.50 per ton.
Investors sold off Glencore bonds, highlighting nerves over its debt burden and financial situation.
MSCI’s broadest index of Asia-Pacific shares outside Japan slid 2.0 per cent, having earlier touched its lowest levels since June 2012.
At home, the losses were led by local commodity stocks, which suffered huge collateral damage following the pummelling of mining and commodity trading giant Glencore.
Australian energy shares also tumbled, with Santos, Origin Energy and Karoon Gas all losing around a tenth of their stock market value. “It was painful – Pets.com – but there was no systemic crisis”, Condon said.
Both Glencore and Noble Group have also seen their Credit Default Swap (CDS) prices – the cost of insuring against the companies defaulting on their debt – soar this year. Shares of the company are in a trading halt. The analysts looked at commodity busts dating to the 18th century and found them driven by factors such as market momentum rather than fundamentals, LaForge said Monday in an interview. CNOOC Ltd and PetroChina slid to their lowest intraday levels since March 2009. (1088.HK), China’s biggest coal producer, fell 5.3%.
Commodity currencies languished while the USA dollar stood tall.
Our earlier story, from the Associated Press, posted at 3:42 a.m.
Commentaries in state media chastised Li this month for being immoral and ungrateful, accusing him of running out on China as its economy slows despite profiting handsomely in better times. Wall Street was set to open higher, according to index futures. That market was catching up with the region’s losses Monday, when it was closed for holiday.
Japan’s Nikkei brushed aside an unexpected drop in the country’s industrial output and gained 1.6 percent. If these trends continue, then it will make it that much harder for the Fed to consider raising rates this year, not least because the dollar appreciation will have a dampening effect on the US economy. The euro slipped about 0.1 percent to 134.68 yen. In January, news of Li’s business overhaul was followed by three overseas bids, including $15.4 billion for Britain’s O2, owned by Spain’s Telefonica SA. The fallout from Volkswagen’s emissions rigging scandal is spreading to other auto brands.