Watch for another big sell-off this morning here – led by the big miners after a bloodbath on offshore markets, especially in London.
Led by big falls in US and UK copper prices – down more than 3% on the day in London and the US – the prices of major mining companies slumped sharply led by Glencore, BHP, Rio and others.
Gold and oil also fell sharply and they continued to weaken in early Asian trading this morning.
The Aussie dollar sold off as well and is now under 70.90 US cents and weak.
European markets fell heavily, US markets less so, but still more than 1%. Our market is looking for a 60 point plus loss on the ASX 200 at the start of trading this morning, and it wouldn’t surprise if the losses grow.
Complicating matters for investors was the rapid escalation of the VW diesel engine scandal in the US to a worldwide crisis for the car industry and its suppliers (which have already been under pressure from the rapid slow down in the Chinese car sector).
Wall Street finished lower after slumping commodity prices reawakened concerns of slowing global growth. Healthcare and biohealth stocks lost ground for a second day as money grubbing hedge funds and other investors came into the spotlight of politicians, threatening optimistic profit forecasts for the sector.
While the final losses on Wall Street were smaller than those earlier in the session, they were still substantial and a reminder of the febrile nature of global markets.
The Dow shed 179.92 points, or 1.1%, to close at 16,330.47. The S&P 500 Index lost 24.23 points, or 1.2%, to 1,942.74. The Nasdaq Composite dropped 72.23 points, or 1.5%, to finish at 4,756.72.
The Stoxx Europe 600 index lost 3.1% in value, suffering its third loss in four sessions. Germany’s DAX 30 index ending down 3.8% at 9,570.66. France’s CAC 40 index fell 3.4% to 4,428.51, both taking the brunt of the sell-off in the car company and parts sectors.
In London the FTSE 100 index dropped 2.8% and under the 6,000 point level for the first time in a month as the market was hammered by the sell off in mining stocks.
As well the Volkswagen diesel car software deceit expanded rapidly, with shares in the car maker down another 20%, shares in other car companies in Europe and the US also falling, while the shares of major car parts suppliers also fell.
Analysts say the story is quickly developing into a major crisis for the global car industry which has been caught up in the years of fraud and deceit by VW in the US as it pulled the wool over the eyes of regulators by using software to give false reading of emissions from its popular diesel range of cars.
More than 11 million VWs are now involved, governments across Europe, Asia and the US are investigating, share prices are tumbling, dragging down wider markets (such as German’s).
VW has set aside 6.5 billion euros as a first reserve against costs (which are going to be enormous), and the company’s CEO, Martin Winterhorn faces possible replacement at a board meeting tomorrow night in Germany.
This story lashed European and overnight, US markets, inflicting considerable pain on investors and suppliers and there are growing doubts that VW, the world’s second biggest car maker, can survive in its current form.
But on top of this big falls were triggered out of nowhere in the prices of major mining companies after the Asian Development bank downgraded its Asian GDP forecasts, including those for China (see separate stories).
In the miners, Glencore shares lost 16% in value at one stage, falling under the 100 pence level for the first time ever. The shares ended down 11%. Anglo American shares touched a 15-year low and Antofagasta Plc (A big copper miner) sank 7.3%.
BHP shares lost 5.1%, Rio Tinto, 3.5%. Shares in big global gold miners, Barrick Gold (down more than 7% in New York, and Newmont 6.25% in New York as well) were hammered.
Brent crude, the global oil standard, fell 1.8% to $US48.05 a barrel. West Texas Intermediate, the US oil standard, fell 3.1% to $US45.25 a barrel. Gold slid 0.7% to $US1,125.98 an ounce, more than 13% below its high for this year.
And copper dropped around 3.8% to just over $US5,100 a tonne in London, and by a similar amount in New York on the Comex exchange.
