European Mining Stocks Hit Hard as Metal Prices Fall

US Dollar Surge and Disappointing China Stimulus Weigh on Market
European mining stocks experienced significant declines this week, as metal prices tumbled across the board. The drop was driven by a stronger US dollar, which pressured the prices of both industrial and precious metals, including copper, gold, and silver. The fall in prices followed the victory of Donald Trump in the US presidential election, which bolstered the dollar and dampened investor sentiment.

Shares of major mining firms, including Rio Tinto, Anglo American, and Glencore, dropped between 5% and 7%, making the mining sector one of the worst performers on the European stock market. The Pan-European Stoxx 600 index fell by 2%, with the Basic Resources Index leading the losses, down 3.72% on Tuesday. The strength of the US dollar combined with investor concerns over global economic growth have led to a broad retreat in mining stocks.

China’s Stimulus Measures Fall Short
Disappointing Details Dampens Outlook for Industrial Metals
While much of the market’s focus was on the US election, attention also turned to China’s latest economic stimulus package, which failed to meet investor expectations. China’s 10 trillion yuan (€1.3 trillion) package aimed at easing local government financing constraints was seen as underwhelming due to its lack of direct cash injections into the economy. As the world’s largest importer of metals like copper and iron ore, China’s demand for these materials is a crucial factor in setting prices globally.

Copper and iron ore futures fell sharply in response to the stimulus briefing. Copper dropped by 3.5%, while iron ore prices fell by 3.3%, marking the lowest levels since late August. The continuing property crisis in China, particularly its effect on the steel industry, further dampened demand, contributing to the overall slide in industrial metal prices.

Gold and Silver Prices Plunge
Trump’s Victory and Rising US Bond Yields Drive Precious Metals Lower
Precious metals, particularly gold and silver, have seen sharp declines following Donald Trump’s election victory. Gold futures fell by approximately 5%, losing around $105 per ounce, while silver dropped by 6% over the past week. The surge in the US dollar, coupled with rising US government bond yields, has made gold and silver less attractive to investors.

Market participants now expect Trump’s policies, including tariffs, to fuel inflation in the US, which could prompt the Federal Reserve to hike interest rates further. This expectation has supported the dollar, while higher bond yields have pressured the price of precious metals. Analysts are now watching closely for any signs that gold may break below the $2,600 per ounce mark, which could trigger additional selling pressure.

Outlook for Copper and Iron Ore
Tariff Concerns and China’s Slowing Growth Add Uncertainty
The outlook for copper and iron ore remains cloudy, with the continued impact of US tariffs on China likely to dampen demand for these critical industrial metals. The potential for further depreciation of the Chinese Yuan due to tariffs could also reduce China’s purchasing power, exacerbating the pressure on metal prices.

As China struggles with an ongoing property crisis and its industrial sector faces challenges, commodity markets are expected to remain volatile. The risks posed by trade tariffs and broader geopolitical tensions may further weigh on the prices of copper and other base metals in the short term.