Global mining stocks and sector-related exchange traded funds plunged Monday over Chinese growth concerns after the emerging economy revealed weak trade data.
The broad iShares MSCI Global Metals & Mining Producers ETF (NYSEArca: PICK) dropped 5.8% Monday. Additionally, the more focused VanEck Vectors Steel ETF (NYSEArca: SLX) plunged 7.2%, VanEck Vectors Gold Miners ETF (NYSEArca: GDX) fell 6.0% and Global X Silver Miners ETF (NYSEArca: SIL) declined 6.2%.
The mining sector retreated along with the metals commodity Monday after China, the world’s largest consumer of raw materials, revealed exports dipped by 1.8% in April, compared to expectations of a 0.1% fall, and imports slumped 10.9% year-over year, compared to projections of a 5% contraction, CNBC reports.
Related: Mining, Materials ETFs Rebound Significantly Amid Coal Controversy
After a spat of speculative trading that helped bolster commodity prices over the past few months, Chinese miners have increased production and increased inventories. Consequently, imports of commodities fell in April month-over-month.
“Overall, China’s commodity trade data reflected cooling demand in domestic market from last month, yet the recovery is on track, although at a slower pace,” Helen Lau, an analyst at Argonaut Securities, told the Financial Times. “We think a slower recovery is healthy and much more needed than March frenzy, which was mainly driven by credit expansion.”
[related_stories]Further fueling concerns over China’s outlook, a government controlled newspaper argued Beijing should abandon stimulus to drive growth.
“Trees cannot grow to the sky, and high leverage will undoubtedly bring high risks. If it’s not controlled it will cause a systemic financial crisis and cause the economy to contract and even evaporate ordinary people’s savings,” according to the People’s Daily. “We can’t and there’s no need to use more leverage to boost economic growth.”
Related: China A-Shares ETFs Bounce on Beijing’s Support
Additionally, a weakening U.S. dollar dragged on metals prices Monday. The USD appreciated after Federal Reserve Bank of New York President William Dudley reaffirmed that it remained a “reasonable expectation” that the Fed would raise interest rates two times this year.
For more information on the China ETF market, visit our China category.
iShares MSCI Global Metals & Mining Producers ETF