Mining stocks were very much out of favour on Tuesday, dragging the FTSE 100 down 2.1% to 5,691.
BHP, Evraz and Anglo American all fell by more than 5%, alongside similar weakness in oil producers Royal Dutch Shell and BP as the market worried about commodities demand.
Brent Crude oil dropped 10% to $22.97 amid elevated concerns over buyers for oil and storage capacity, essentially negative read-across from yesterday’s dramatic scenes involving the WTI oil contracts.
Russ Mould, investment director at AJ Bell said, “Given that it dominated headlines around the world, the turbulence in the oil sector has naturally fuelled speculation over whether yesterday’s oil shock was a one-off or signs of bad things to come.
“Asian markets today extended last night’s losses seen on Wall Street with Hong Kong and Japan both seeing 2% declines. European markets were also in the red.”
Global risk appetite faltered yesterday after a plunge in the price of oil futures rippled across broader assets.
There were some extraordinary numbers on show with oil for May delivery trading at almost -$40 as traders were forced to pay other market participants to take oil off their hands.
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