mining stocks
US Dollar Strength and China’s Stimulus Disappointment Drive Market Losses
European mining stocks saw significant declines this week as metal prices tumbled due to a stronger US dollar and underwhelming China stimulus measures. The surge in the US dollar, following Donald Trump’s victory in the US presidential election, put downward pressure on industrial and precious metals, including copper, gold, and silver. This led to a sharp decline in mining sector stocks.
Shares of Rio Tinto, Anglo American, and Glencore fell between 5% and 7%, making mining one of the worst-performing sectors in European markets. The Pan-European Stoxx 600 index declined 2%, while the Basic Resources Index dropped 3.72% on Tuesday. Investor concerns over global economic growth have fueled further selling pressure in the sector.
China’s Economic Stimulus Measures Disappoint Markets
While attention was on the US election, investors also reacted negatively to China’s latest economic stimulus package. The 10 trillion yuan (€1.3 trillion) package, aimed at easing local government financing constraints, failed to meet expectations due to its lack of direct cash injections into the economy. As China is the world’s largest importer of metals like copper and iron ore, weaker demand has intensified the decline in commodity prices.
In response, copper prices dropped 3.5%, while iron ore prices fell 3.3%, marking their lowest levels since August. China’s ongoing property crisis has further weakened steel demand, driving a broader decline in industrial metal prices.
Precious Metals Plunge as US Bond Yields Rise
Gold and silver prices have also suffered sharp declines following Trump’s election victory. Gold futures fell 5%, shedding $105 per ounce, while silver dropped 6% over the past week. The stronger US dollar and rising US bond yields have reduced investor appetite for precious metals.
Market expectations that Trump’s policies could fuel inflation have heightened fears of more Federal Reserve interest rate hikes. This scenario has supported the US dollar, while higher bond yields have further pressured gold and silver prices. Analysts warn that if gold breaks below the $2,600 per ounce mark, further selling pressure could emerge.
Uncertainty Over Copper and Iron Ore Prices
The outlook for copper and iron ore remains uncertain amid continued US tariffs on China. The possibility of a depreciating Chinese yuan could further reduce China’s purchasing power, adding to the downward pressure on metal prices.
As China’s property sector struggles and its industrial economy slows, commodity markets are expected to remain volatile. Risks from US-China trade tensions and global economic uncertainty may weigh on copper and base metal prices in the near term.
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