Sector movers: Mining, metals stocks dented by Chinese manufacturing data

Declines in mining, metals and oil and gas stocks pulled the London market lower on Tuesday as resumption of trading after the Bank holiday weekend was greeted by lacklustre manufacturing data from China.

The FTSE 100 fell 3.03% or 189.40 points to 6,058.54, while the FTSE 250 was down 1.56% or 266.00 points at 16,840.36. Earlier, the official purchasing managers’ index for Chinese manufacturing activity fell to 49.7 in August, from the previous month’s reading of 50. A figure below 50 signals a contraction in the sector while a level above that indicates expansion.

The data sent oil trading into negative territory in Asia, a trend that continued for much of the European session largely negating Monday’s gains. At 1610 BST, the Brent front month futures contract was down 6.61% or $3.58 at $50.57 a barrel, while the WTI was 6.40% or $3.15 at $46.05.

While industrial metals saw a calmer European session with all major three-month futures contracts on the London Metal Exchange broadly in positive territory, mining and metals companies were not so lucky as worries over China’s importation levels continue to lurk around.

Analysts at Deutsche Bank said China’s copper demand grew at a compound annual growth rate (CAGR) of 7.5% in the period 2010 – 2014. They estimate the CAGR between 2014 to 2020 to be lower at 3%, with slowing demand growth across all sectors, chiefly construction and electrical. The market expects similar lower demand for a number of metals with producers heavily reliant upon China.

Commodities trader and miner Glencore led the blue chip fallers list, ending down 9.98% or 14.80p at 133.50p. Industry peers Anglo American (down 7.64%) and BHP Billiton (down 6.71%) were also among the major FTSE 100 fallers.

Evraz, down 10.20% or 8.05p at 70.90p, was atop the FTSE 250 fallers list, joined by Kaz Minerals which shed 6.59%. However, Vedanta Resources bucked wider industry headwinds to post a 2.47% gain, ending up among the midcap risers.

Wild swings in the global oil markets meant the blue chip oil and gas duo of BP (down 0.50%) and Royal Dutch Shell (‘a’ shares down 3.36% / ‘b’ shares down 0.81%) also ended the session lower.