Mining slump sends FTSE tumbling

Steep falls across global markets have raised fears of another sustained selloff.

London Stock Exchange
Source: Bloomberg

Late September seems to have much in common with late August – namely disappointing weather and stock market sell-offs. This time round, however, there is no specific cause which can be blamed.

Throughout the month, the inability of indices to hold rallies showed that buying pressure is weak, and a combination of a fairly cautious Fed last week, plus the travails of Volkswagen and comments from a key stainless steel producer in Finland have provided the fuel for the FTSE 100’s latest slump. This has pushed the index to new lows for the month, with eurozone indices following suit. US markets are being sold just as heavily, as buyers search in vain for reasons to be positive. 

Once again, the index’s position as a hub for global commodity firms is proving its undoing, with major names such as Anglo American and Antofagasta losing more than 6%. Bottom of the class once again is Glencore, down another 11%.

Raw materials have been hard hit too today, and although Chinese manufacturing PMIs are out tomorrow, it will take a very strong reading on the positive side before any rebound in prices can be contemplated.

Faced with further problems at Volkswagen, investors have decided that the prudent thing is to move funds from automobile manufacturers as quickly as possible, pulling the rug from underneath such firms as Peugeot and BMW, as well as major names on the other side of the Atlantic. Volkswagen may be an isolated case, but knee-jerk reactions are strong today, with investors minded to sell first and ask questions later.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.