MT - Why Shares in ArcelorMittal Slumped Today
Shares in integrated steel and mining company ArcelorMittal (NYSE: MT) were down nearly 8% this afternoon. The move comes in concert with a generally bad day for so-called "inflation plays" and a downgrade from an analyst at a heavyweight investment company, JPMorgan .
The downgrade from "overweight" to "neutral" and the price target cut was a bad day for investors looking to profit from surging raw materials prices.
There's a sense that the Federal Reserve's recent rate hike will lead to more rate hikes, and the bond markets have been busy pricing in higher interest rates. All of this speaks to slowing economic growth in the future as higher interest rates make investment more expensive. Given the sensitivity of steel demand to economic growth, it's not surprising to see it sold off. Indeed, the steel rebar price (reinforcing bar used in construction, for example) has fallen by around 17% since the start of May.
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Why Shares in ArcelorMittal Slumped Today