• Economists say China’s retail sales and industrial data provide little hope for a fast turnaround, weighing on metals
  • All corners of the mining sector get smashed, with gold, battery metals, iron ore and coal miners taking an L


Gold’s fall from grace to a 2.5 year low was the headline grabber as markets opened with a throbbing hangover this morning.

Sorry, it didn’t get any better elsewhere, with the metals sector copping the trading day equivalent of the lurgy, leprosy, black death or some other terrifying and long thought extinct illness.

The big pinch on gold came from fears around further rate rises after the US Government’s ominous inflation numbers this week.

In times gone by Australian mining stocks have been able to look longingly over at their frenemy China for a bit of TLC when everything else is going pear shaped.

But the exceptionalism of China’s economy has been cast in a more negative light of late with a decrepit property market and endless wave of Covid lockdowns.

Some new economic data for August provided little hope of a fast turnaround.

Retail sales fell 0.8% month on month in seasonally adjusted terms, Capital Economics senior China economist Julian Evans-Pritchard says. Youth unemployment remains shockingly high as well, not far off 20%.

Fixed investment rose 5.8% year on year, with industrial output growth up from 3.8% year on year to 4.2%YoY, though CapEc attributes this to a low base going back to the start of China’s lockdowns.

“All told, the August data point to slight loss of momentum overall, with policy support helping to keep industrial growth steady but failing to prevent a drop in consumer spending. September is on track to be even weaker,” Evans-Pritchard said.

“Although the power shortages have now eased, virus disruptions intensified at the start of the month as an increasing number of cities entered lockdown, the largest being Chengdu.

“High frequency data point to a further decline in property sales, car sales and the volume of goods passing along highways and through Chinese ports.”


Metals drop

China’s response to Covid will be assessed at the Communist Party’s congress in October. It could be a while before things look some shade of normal over there.

Copper, nickel, iron ore and zinc have all been weighed down by Chinese demand fears, although news of production shutdowns in Yunnan saw aluminium prices rise overnight.

62% Fe iron ore futures were down 1.99% or $2 to US98.70/t in Singapore today.

But look forward to the weekend.

As has been the case for most of this year, you can expect most negative Chinese economic data to be followed by some sort of stimulus announcement from Xi and Co., which tends to give the metals complex a little boost.

And steel production looks to be up in early September too, providing some support to iron ore players.

As for today, it was a stinker, with materials down 2.31% and energy stocks tumbling almost 3%.

Goldies wore the biggest losses, but some recently fancied sectors like battery metals and uranium were also a little worse for wear.

Boss Energy (ASX:BOE) fell by almost 9%, while Sayona Mining (ASX:SYA) was similarly weak. Copper miner Sandfire Resources (ASX:SFR) and platinum group metals play Chalice Mining (ASX:CHN) were both down more than 6%, while high-flyers Yancoal (ASX:YAL), Lynas Rare Earths (ASX:LYC), MinRes (ASX:MIN) and IGO (ASX:IGO) all tripped hard.


Smashed share prices today: