Mining Shares Drop as Bloomberg Commodity Price Index Hits 13-Year Low

The Financial Times reported that mining shares have plunged along with the Bloomberg commodity price index, which hit its lowest reading since March 2002 at 95.5 points.
As quoted in the market news:

Billions of dollars of shareholder value was erased from the world’s largest mining companies on Wednesday as an index of commodities prices plumbed a fresh 13-year low.

The Bloomberg commodity price index, which tracks a basket of the world’s most commonly used raw materials, fell to 95.5 points, its lowest reading since March 2002. The Bloomberg commodity index has declined by more than 40 per cent since September 2011, with the recent slide intensifying selling of shares in mining companies.

The gold price declined by $12 to $1,088 an ounce, marking the third time it has fallen below $1,100 after a bout of panic selling in China erupted on Sunday.

“Precious metals appear to be the main driver” of this current outbreak of negative sentiment, said Nic Brown, head of commodities research at Natixis. He added that the commodities sector had been persistently underperforming for several months, with a gradual deceleration in Chinese growth and a stronger dollar contributing to what felt like “the world’s longest hangover”.

Shares in Anglo-American, which is heavily invested in iron ore production in Brazil, dropped 5.59 per cent to the bottom of the FTSE 100 index. Glencore’s shares fell 5.4 per cent to the lowest level since it listed in 2009.

Shares in BHP Billiton fell 5.7 per cent in London, after the Anglo-Australian diversified miner revealed in a quarterly update that it planned to take a sizeable charge of $350m to $650m on underlying profit, mostly because of weakness in its copper business.

Click here to read the full Financial Times report.