Anglo American Plc and Tullow Oil Plc led an end-of-year rally in mining and energy stocks as investors found reasons to cheer amid the worst commodities rout since the global financial crisis.
U.K.-traded mining and energy shares rose the most in more than two months in London as industrial metals and oil rebounded and investors looked to reports Wednesday for signals that the U.S. economy, the world’s largest, is strengthening. In China, the biggest commodities buyer, indicators in December have showed signs of stabilization.
The Bloomberg Commodity Index, a measure of investor returns in raw materials, is heading for the worst annual decline since 2008 after reaching a 16-year low last week. Slowing demand from China and a growing glut of everything from oil to copper have prompted the investor sell-off.
“People are buying the laggards of this year,” said Benno Galliker, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland. “It’s usual for the market to go higher the day before Christmas holidays, and the volumes are very thin so you can easily move the market.”
Oil companies rose as crude prices climbed, with Tullow’s 8 percent advance making it the biggest gainer on the Stoxx Europe 600 Index after steelmaker ArcelorMittal. Tullow’s loss this year is still nearing 60 percent. Royal Dutch Shell Plc, Europe’s largest oil company, climbed 4.3 percent as of 1 p.m. in London after cutting spending plans for this year and next as it prepares to take over BG Group Plc. BG jumped more than 6 percent.
Glencore Plc, the Swiss commodity trader and miner, was among the three-biggest gainers on the FTSE 350 Mining Index, advancing 5.6 percent to the highest since Dec. 11. Anglo American rose 7.5 percent while BHP Billiton Ltd., the largest mining company, increased 6.3 percent. ArcelorMittal jumped the most in more than two months after the U.S. Department of Commerce found that cheap imports from China were being sold at unfairly low prices.
U.S. gross domestic product expanded at a revised 2 percent annualized rate, a government report showed Tuesday, beating the median forecast in a Bloomberg survey. Personal income, new home sales and sentiment data will be published later Wednesday. China, the biggest metals consumer, will add monetary stimulus next year, making good on a pledge to support growth as leaders push through policies to cut overcapacity and reliance on credit, according to economists surveyed by Bloomberg.
Aluminum for delivery in three months led the metals rally, climbing as much 2.2 percent to a two-month high of $1,540 a metric ton on the London Metal Exchange. Traders have been making purchases to close out bets on falling prices amid the 2016 Chinese stimulus talk, according to David Wilson, an analyst at Citigroup Inc. in London. The LME index is heading for the biggest loss since 2008 this year.
“They’ve fallen so much that a bounce is not unexpected,” said Wayne McCurrie, who helps manage 170 billion rand ($11.2 billion) at Momentum Wealth in South Africa. “The sheer extent of the fall can give you quite a strong bounce.”
– Bloomberg [with assistance from Amanda Jordan and Kevin Crowley].