Warning Signs for Bull Market

Signs that the bull market in global equities is coming to an end triggered a difficult period for stock markets but most metals performed surprisingly well.

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Last week was an uncomfortable one for equity investors. Markets had already seen a ferocious sell-off in US government bonds at the start of this month as investors realized the strong local economy was going to allow the Federal Reserve to continue raising interest rates. During the past week it finally dawned on equity investors that higher treasury yields would also have a negative impact on equity values.

Matters were not helped by Larry Kudlow, head of President Trump's economy team admitting in mid-week that China had shown "no willingness to meet trade demands". Equity prices tumbled around the world, and although the factors had been well signposted, the abruptness of the lurch came as a shock.

At one stage the Financial Times estimated losses in global equities at US$2.7 trillion, and US equities led the way with a 6.7% six-day slide to the low point on Thursday. After what was a dismal week on Wall Street, there was at least encouragingly strong earnings announcements on Friday from JP Morgan and Citigroup.

Despite the awkward and combative trade talks between the US and China, most metals were stronger in the seven days to end-Friday. Iron ore (62% Fe) improved 2.7% to US$71.5/t over the week, with copper not far behind, up 2.0% at US$6,325/t. Nickel strengthened 1.8% to US$12,785/t and zinc rose 1.5% to US$2,658/t. Gold was again disappointing, up just 0.2% at US$1,206/oz but aluminium was the standout disappointment, down 3.5% at US$2,057/t.


Chris Hinde

Chief Commentator, Mining Beacon

Previously editorial director of Mining Journal, and more recently head of S&P Global Market Intelligence's metals and mining team, Chris is now Mining Beacon's editor-in-chief and lead commentator. He posts two blogs every week, one on Monday reviewing market conditions over the prior week, and a second on Thursday looking at issues on the global mining scene. There is also a quarterly blog on business opportunities in the sector.