Glencore share price hit worst in fallout from China’s slowdown: The scale of impact on commodity stocks and financial services revealed

Just one month after plummeting Chinese equity markets sent shockwaves across global stock exchanges, industries around the world are seeing the damaging effects that China’s slowdown is having on jobs, growth and investment.

 

“The Chinese slowdown and the Chinese economic rebalancing are pretty remorseless,” Kit Juckes, macro strategist at Societe Generale, told City A.M.

 

“The shockwaves are across multiple geographies, multiple companies, and they keep on coming,” he said, adding: “The image in my mind is permanently a piece of dominoes.”

 

A new survey out today from the Confederation of British Industry (CBI) and PwC shows that growth in business volumes for financial services firms slowed in the three months to September, as optimism levelled out amid slower growth in China.

 

“The winds of volatility blowing through global markets have left a clear mark on the financial services sector, impacting business volumes and investment intentions, particularly in investment management and securities trading,” CBI director of economics Rain Newton-Smith said. 

 

“Slower growth in China and other emerging markets has had a knock-on impact on confidence in the world economy,” he added.

 

The survey comes as commodity stocks continue to plummet, with the Anglo-Swiss mining giant Glencore seeing its share price fall nearly 10 per cent yesterday. Worries over China’s slowdown have contributed to Glencore being the worst performer on the UK’s blue-chip index so far this year.

 

Other mining players have also been hit hard, with Anglo American closing down 4.5 per cent, and Antofagasta slipping 2.5 per cent yesterday alone.

 

Meanwhile, top British steelmakers have called on the government to increase help to the sector after SSI UK, Britain’s second-largest steelmaker, stopped production last week on the back of China-related concerns and a collapse in global steel prices, calling into question its future and putting thousands of jobs at risk.

 

And in the US, Caterpillar, the world’s biggest construction and mining equipment maker, cited the slowdown in industrial activity in China as it slashed its 2015 revenue forecast and said it could cut up to 10,000 jobs in the next three years.

 

“The Chinese slowdown is a real thing,” Juckes told City A.M., adding that while “direct economic risk seems small”, slower growth in China is rightly fuelling fears of a global downturn.

 

“It doesn’t have to end badly, but the tail risk of this dragging the global economy down from China… feels fatter than it did to people a year ago,” he said.