Mining shares are facing the biggest back-to-back weekly losses in four years after signs of slowing growth in China, plunging oil prices and asset writedowns at BHP Billiton Ltd. sparked a selloff across the industry. Industrial metals fell on Friday.David Gray / Reuters/Reuters
Mining shares are facing the biggest back-to-back weekly losses in four years after signs of slowing growth in China, plunging oil prices and asset writedowns at BHP Billiton Ltd. sparked a selloff across the industry. Industrial metals fell on Friday.
The Bloomberg World Mining Index sank 3.5 per cent on Friday, with Vancouver-based First Quantum Minerals Ltd. and Anglo American PLC among those leading the measure lower. In the past two weeks, the gauge lost about 15 per cent of its value, the most since 2011. Copper touched a fresh six-year low, and lead and zinc slid more than 1 per cent in London.
"We're looking at a weak end to the week, with base metals selling off alongside oil and other industrial commodities," Leon Westgate, an analyst at ICBC Standard Bank PLC in London, said by phone.
Metals have dropped this year along with other commodities, as volatility in China's equity and currency markets rattled investors worldwide, spurring aversion to assets perceived as risky. An economic report scheduled for Tuesday is forecast to show China's economy slowed to the weakest pace since 1990. The country's lunar new year break follows in February, when industrial activity typically slows.
BHP, the world's largest mining company, sank 6.4 per cent in London. The company said it expects to take a writedown of $4.9-billion on the value of its U.S. shale assets due to the tumble in oil prices. Its next safeguard against the commodities collapse may be to abandon its decade-old pledge to maintain or raise its dividend.
Freeport-McMoRan Inc., the biggest publicly traded copper company, has lost 23 per cent this week, heading for the worst such decline since 2008. The shares are near the lowest since 2000.
Chinese shares fell into a bear market for the second time in seven months, wiping out gains from an unprecedented state rescue amid waning confidence in the government's ability to manage the country's markets and economy. Oil is heading for a third week of declines, with West Texas Intermediate reaching $29.13 a barrel, the weakest since 2003.
Copper futures retreated 1.6 percent to settle at $1.9435 a pound at 1:16 p.m. on the Comex in New York, wiping out yesterday's gain. Prices are down 9 percent this year.
"Today's price action just underscores how transient fragile rallies really are in the face of the Chinese financial tsunami," Michael Turek, the head of base metals at BGC Partners Inc. in New York, said in an e-mail. "The market clearly awaits real structural change rather than cosmetic surgery -- a nip here and a tuck there."