Anglo American drives dividend fears

European indices are flushing lower, in a continuation of the selloff following last week’s European Central Bank disappointment.

Anglo American
Source: Bloomberg

Unfortunately, there were warning signs that markets could be set for another selloff even before the ECB took the stage on Thursday, and with the DAX down over 200 points today, anxiety is clearly rife that it may not be such a merry Christmas for stock market investors.

Today’s decision from Anglo American to scrap its dividend is likely to be the beginning of a worrying trend for the miners. The attractiveness of owning oil or mining shares has been questionable of late and with the prospect of dividends also being scrapped, the sector is fast running out of reasons to invest.

The selloff seen across FTSE commodities stocks highlights the flock to dividend safety with Anglo American likely to be the first of many firms sacrificing its dividend.

The commodities sector will be back in focus tomorrow, following the release of Chinese CPI data. With China firmly at the forefront of traders’ minds following the overnight trade data, many will be hoping for a weak CPI reading to advance the view that China will ease once more, spurring on greater domestic consumption and investment.

Evidence of the relative stability of the US jobs market has been highlighted once more today, with the US JOLTS report indicating that job openings, hires and separations were largely stable.

The JOLTS report is rumoured to be Janet Yellen’s favourite labour market measure and with such stability confirming a robust jobs report last week, a December rate rise seems more likely than ever.

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