Daily Agenda: Commodity Producers Drag Stocks Lower

Anglo American retreat hits Stoxx Europe index; Chinese data shows weak demand; Bernanke to join PIMCO advisory board.


The commodity rout continues to send shockwaves through financial markets. Earlier today, London mining giant Anglo American announced that it will suspend the dividend and reduce its asset portfolio by as much as 60 percent, as the metals industry struggles with slack demand from China. The company’s stock declined nearly 9 percent in London trading afterwards, helping to drive the Stoxx Europe index down by a percent as the entire mining sector declined. Meanwhile, as investors digest results of the Organization of Petroleum Exporting Countries meeting last week, in which producing nations announced they would not curb output, energy markets continue to be wracked by selling pressure. Futures contracts for January delivery of West Texas Intermediate-grade crude declined by nearly 6 percent in trading in New York Monday, falling below $38 per barrel, while Brent contracts fell below $41.

Chinese trade data remains weak. A report issued by China’s General Administration of Customs revealed softer than anticipated export levels for November while the pace of imports declined by less than consensus economist forecasts. Inbound shipments fell by 8.7 percent year-over-year while outgoing levels slipped by 6.8 percent versus November 2014. The data, calculated in U.S. dollars rather than volume, follows weakened purchasing-manager index levels despite recent interest rate cuts by the People’s Bank of China.

Canadian Pacific raises Norfolk Bid. On Tuesday, Canadian Pacific Railway revised its proposed acquisition price for Norfolk Southern Corp. The new offer to shareholders included $32.86 per share in cash as well as 0.451 shares in the new company.

Credit data indicate cautious shoppers. The pace of expansion for U.S. consumer credit remained subdued at an annualized 5.5 percent in October, according to data released yesterday by the Federal Reserve. Revolving credit, which includes credit cards, rose by a mere 0.2 percent, suggesting that the consumer-discretionary sector may face cautious shoppers this holiday season.

In wake of attack concerns over French growth. On Tuesday, the Bank of France reduced its forecasts for growth in the final three months of this year to an annualized 0.3 percent pace after business sentiment soured following terrorist attacks in Paris last month. Separately, Eurostat’s revised GDP for the third quarter remained unchanged at 0.3 percent as slow external demand continues to weigh on the common currency region.

Bernanke joins PIMCO board. Newport Beach, California-based Pacific Investment Management Co. announced Tuesday that former Federal Reserve Chairman Ben Bernanke will join its global advisory board. Bernanke will rub shoulders on the board with Jean-Claude Trichet, former president of the European Central Bank, and former UK Prime Minister Gordon Brown.

Beijing shuts down on smog concern. Twenty million residents of China’s capital were advised to wear protection against air pollution Tuesday in the first use of a new policy enacted to address citizens’ concerns. The move halted industrial production in the region and some schools closed while cars with odd-numbered license plates were barred from the roads. The “red alert” came as the air-quality index used by city officials breached the 300 threshold.