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FTSE tumbles as miners reel from commodities crunch

FTSE 100 loses more than 100 points as shares in miners are hit hard by dive in metal prices on strong dollar.

FTSE tumbles as miners reel from commodities crunch

Update: The FTSE 100 has lurched heavily into the red, dragged down by a major sell-off in the commodities sector as metal prices tumbled.

The UK blue-chip index fell 113 points, or 1.5%, to 7,497, with shares in miners sold off heavily.

Metals came under pressure from renewed strength in the dollar, in which they are priced, which rose to its highest level against a global basket of currencies in more than a year.

Miners littered the bottom of the FTSE 100, with the index's heaviest fallers including:

  • Fresnillo (FRES) -8.1% at 893.8p;
  • Antofagasta (ANTO) -6.2% at 831.6p;
  • Evraz (EVRE) -5.9% at 487.4p;
  • Anglo American (AAL) -5.8% at £15.48;
  • Glencore (GLEN) -5.7% at 298.4p;
  • BHP Billiton (BLT) -5.5% at £16.08;
  • Randgold Resources (RRS) -5.4% at £50.16;
  • Rio Tinto (RIO) -3.5% at £36.46.

The oil price was also hit, falling 2.7% to $70.49 a barrel of Brent crude, sending shares of Shell (RDSb) 2.4% lower to £24.76 and BP (BP) 2.2% down at 542.9p.

It was a similar story on the FTSE 250, where commodities stocks were down heavily. Kaz Minerals (KAZ) fell 10.5% to 549p, Premier Oil (PMO) was down 8.4% at 108.3p and Ferrexpo (FXPO) dropped 7.7% to 158.7p.

'Trading got real ugly on Wednesday afternoon,' said Connor Campbell, analyst at Spreadex. 'The dollar's latest gains were just too much for commodities... leading the FTSE's index-defining oil and mining sectors to have a mid-week breakdown.' 

But the sell-off was not limited to commodities stocks. All but a handful of FTSE 100 stocks traded in the red, as bearishness told hold among investors.

Emerging markets officially entered bear market territory, down 20% from their peak, further souring the mood and knocking the shares of investment trusts focused on that sector.

Metal prices had already been under pressure from news of a sharp slowdown in China's fixed-asset investment growth, which had dragged the price of copper down to 13-month lows this week.

Copper had also taken a knock from news the union for Chile's Escondida mine, the world's largest copper mine, had called off a strike after a renewed contract proposal from BHP Billiton, potentially averting a disruption to supply.

'Copper is widely considered to be a bellwether for the global economy and so a weak price is cause for concern,' said Russ Mould, investment director at AJ Bell.

'Copper was in a falling trend between 2011 and 2016 but has bounced back over the past few years. The latest events put an end to that recovery.'

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