Global stocks slide as geopolitical jitters take hold and iron ore crashes

Global stocks slide as geopolitical jitters take hold and iron ore crashes
Stocks around the world are falling with British Prime Minister Theresa May’s snap election call adding to geopolitical uncertainties for investors.

Markets are already edgy about tensions simmering from North Korea and China, to Syria and Russia, to elections in France where two candidates wanting to take the country out of the region’s common currency remain in contention in what is now the most unpredictable race in recent French history. The first round of voting in France will be this weekend.

Add to that the worries about falling iron ore prices which on Tuesday fell to their lowest level since November. Iron ore has nosedived 32 per cent from its high point in Feb this year.

DailyFX’s chief currency strategist, John Kicklighter put it bluntly in his note to clients. ”We’re overpriced, over risked and just waiting to get creamed” by a “very significant wave of volatility and fear”.

Certainly markets around the world are convulsing.

In Australia, the benchmark S&P/ASX 200 Index slipped 0.9 per cent to close at 5836.7 points and the broader All Ordinaries Index was off 1 per cent to 5868.7 points.

The fall in the iron ore price saw BHP down 1.6 per cent, Rio Tinto sliding 1.9 per cent. Fortescue Metals off 7.5 per cent.  Sliding oil prices saw Woodside Petroleum, Australia’s biggest oil company, closing down 0.4 per cent while South 32 fell 1.4 per cent after it announced it was walking away from a coal acquisition. Newcrest closed down 4.6 per cent, because of production interruptions at its Cadia mine and Aurizon shares slipped 1.5 per cent after it confirmed that Cyclone Debbie had damaged its earnings. Shares in TPG Telecom plummeted 16 per cent to $5.50. The company had come out of a trading halt yesterday, having completed a $400 million capital raising to fund its $1.9 billion plan to start Australia’s fourth mobile network. Investors seemed unimpressed.

Certainly the geopolitical tensions are playing on stocks overseas.

British markets were rattled after Mrs May said she would seek an early election on June 8. While her move was clearly aimed at strengthening her hand going into Brexit talks, the FTSE 100 Index fell 2.12 percent, the most since last June.

On Wall Street, the S&P 500 Index was down 0.28 percent and the Dow Jones Industrial Average was off 0.42 percent in early trade.

European shares fell on Tuesday. The pan-European STOXX 600 index slipped 0.9 percent.

Dominic Konstam, Deutsche Bank AG’s global head of rates research said the snap election in the UK just added to investor jitters.

“The markets are very uncertain and worried about various outcomes,” Konstam said in an interview on Bloomberg TV.

“This just adds another one. We’ve got the tax reform in the US, you’ve got the French and German elections. Now you’ve got this on top.”

 



An award winning author and journalist, commentator, lecturer, and speaker, Leon is a freelance business journalist who covers a range of areas including politics, strategy, globalization, leadership and all the big trends ahead. His main skill is summing up all the news that’s around. For the last 30 years, his main focus has been on management issues. He also produces two podcasts for RMIT University, Talking Business and Talking Technology. Leon has worked for Fairfax, News Limited, AAP and the Herald and Weekly Times.