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.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.