Basic resource shares pumelled, Canadian wildfire blaze slows advance

On Sunday, China’s customs administration said exports and imports shrank by 1.8% and 10.9% year-over-year in April when measured in dollar terms, worse than market forecasts for flat sales abroad and a 4.0% drop in purchases from overseas.

Three-month copper futures on the LME ended the session down by 1.5% to $4,715.00 per metric tonne. Overnight, the most traded rebar futures on the Shanghai Futures Exchange ended the day limit-down, retreating 6% to 2,175 yuan ($334.41) – their largest one-day fall on record. Iron ore futures on the Dalian Commodity Exchange for delivery in September fell in tandem, closing the session down by another 6% to 388 yuan per tonne.

Basic resources pummeled

In parallel, the DJ Stoxx 600’s gauge of Basic Resource shares nosedived 6.69% to close the day out at 259.01.

Among London-traded stocks, Anglo American was again at the bottom of the pile on the Footsie, retreating 13.84% to 559.50pm alongside falls in the likes of Glencore (-8.96%), Rio Tinto (-7.92%), BHP Billiton (-6.09%) and Antofagasta (-5.64%).

As regards specific commodities, oil imports by China jumped by 4.4% or 335,000 barrels per day to 7.90m b/d, but imports of copper ore and concentrates declined by 115kt to 1,260kt, weighing on prices.

Iron ore imports also fell back, shrinking by 1.9mt month-over-month, albeit likely due to day-count differences between March and April, Barclays’s Feifei Li said in a research report sent to clients.

Nonetheless, Li believed current momentum in iron ore might extend into the second quarter, “at least in their view”.

To take note of as well, an article in the People's Daily, widely-recognized as a mouth-piece for authorities in Beijing, the recovery in China's economy will be neither "L-shaped" nor "U-shaped" or "V-shaped", because officials would not employ excessive investment and credit in order to stoke growth.

The comments came as many commentators were warning that China would be best advised to use caution in its attempts to limit the slowdown in its economy given the diminishing returns to be had from applying policy stimulus and its rapidly stock of debt.

Alberta wildfires slow advance

A late drop in crude oil futures also took its toll on the likes of BP and Royal Dutch Shell.

According to some market chatter, traders were reassessing the impact that the wildfires in Alberta, Canada would have on the country’s output.

Estimates continued to point to the interruption of over 1.0m barrels of Canadian oil production, the same as at the end of last week.

To take note of, on Sunday the BBC reported that the wildfires had slowed their advance, although it could be months before it was fully brought under control.

Overextended positioning in the futures market and a ‘bearish’ report from Genscape, referenced by Reuters, pointing to an inventory build of 1.4m barrels a day at Cushing, Oklahoma - the location at which US WTI futures are priced - were also put forward as triggers for the weakness in oil.

Adding to the selling pressure, as of 19:00 BST the US dollar spot index was higher by 0.32% to 94.189.

Top performing sectors so far today
Pharmaceuticals & Biotechnology 12,303.72 +2.33%
Food Producers & Processors 8,649.42 +2.10%
Technology Hardware & Equipment 1,170.44 +1.96%
Health Care Equipment & Services 7,095.42 +1.61%
Travel & Leisure 8,329.54 +1.55%

Bottom performing sectors so far today
Industrial Metals & Mining 1,148.36 -10.79%
Mining 8,693.88 -7.87%
Oil Equipment, Services & Distribution 13,115.46 -2.71%
Oil & Gas Producers 6,178.85 -2.46%
Banks 3,081.98 -1.12%