Declines in miners, energy producers drag equities lower

A rebound in European stocks earlier today was short-lived, with declines in miners and energy producers dragging equities lower for a fifth session.

Shares initially rallied this morning, after a selloff on Friday erased $1 trillion from global equities, pushing government bonds lower in the run-up to the Federal Reserve’s decision on interest rates.

BHP Billiton and ArcelorMittal followed metal prices lower this morning, pushing a gauge of miners to its eighth decline in ten sessions.

Tullow Oil and Seadrill slid at least 4.8 per cent as oil also fell, two days before the Federal Reserve announces its rate decision.

Traders are pricing in a 74 per cent chance for the first increase in US borrowing costs since 2006.

The Stoxx Europe 600 Index reversed gains of as much as 1 percent, falling 0.7 per cent at 12:33 p.m. in London. All 19 industry groups fell.

A high-yield fund liquidating its portfolio also contributed to bearish sentiment across markets, said Benno Galliker, a trader at Luzerner Kantonalbank in Lucerne, Switzerland.

“Nobody is ready to go in and buy and at the moment the sentiment is stay out of the commodities, oil and high-yield sector,” said Galliker.

“If you have any performance left you want to secure it before the year-end. The big news is on Wednesday with the Fed hiking rates, but until then, the market will react to everything.”

The Stoxx 600 has fallen 8.3 per cent this month amid a rout in commodities and disappointment over the extent of European stimulus, defying a seasonal trend that has yielded gains in five of the past six Decembers.

Among stocks active on corporate news, National Bank of Greece slid 30 per cent on its first day of trading after completing a share recapitalisation. Old Mutual and Investec, which get a majority of their revenue from southern Africa, climbed at least 7 per cent.

The rand rebounded after South Africa’s president named his second finance chief in four days, backtracking on his appointment of a relatively unknown lawmaker.

Bloomberg