Market Report: Investors chuck mining shares back on the bonfire

Investors got into the spirit of Guy Fawkes night by chucking mining shares back on the bonfire as an impending rise in US interest rates burned commodity prices.

Federal Reserve chair Janet Yellen hinted at a rate hike in December as the world’s largest economy stabilises despite worrying growth signs from other parts of the world, most notably in China.

Her comments boosted the value of the dollar, which in turn hit the prices of metals and oil – commodities that are priced in the US currency and therefore become more expensive to hold.

Copper, a key industrial metal, dropped to its lowest level in a month, which left Anglo American 44.5p weaker at 534.6p. That takes its stock market decline this year to 55 per cent, not far behind troubled peer Glencore, which has lost 59 per cent of its value.

Of course, things looked worse for Glencore in September when panic around its huge debt triggered a sell-off that wiped 30 per cent from the company’s stock market value in a single day.

Since then, chief executive Ivan Glasenberg has been selling off the trading-cum-mining non-core assets to placate disgruntled investors.

However, Deutsche Bank praised the South African’s efforts as it became the first top-tier broker to upgrade the stock since the September slump. Deutsche’s buy tip and inflated target price of 200p helped it avoid the brunt of the mining sell-off as it slipped just 4.35p to 121.5p.

Brent crude’s retreat to $48.60 a barrel hurt BP, down 11.6p to 390.45p, and Shell, 44p lower at 1,724p.

Oil and mining shares dragged the FTSE 100 into the red, down 47.98 points to 6,364.90. Investors gave energy providers the cold shoulder as big-hitter Goldman Sachs predicted a global gas glut would drive down European gas prices. SSE, now on Goldman’s sell list, fell 5p to 1,534p, while British Gas parent Centrica, downgraded to neutral, fell 3.9p to 228.1p.

An expected £5m annual loss at Snoozebox, which provides portable hotels for the British Grand Prix and Glastonbury, knocked confidence in the AIM-listed company’s turnaround as it fell 0.75p to 8.88p.