Glencore Share Price Nosedives After $486 million US Fine

Summary:

The Glencore share price has nosedived over two days of trading after being fined heavily for market manipulation in the US.

The Glencore share price is down this Monday but has pared some earlier losses to trade 1% lower. This follows Friday’s steep selloff, driven by global risk aversion, that saw the Glencore share price falling by 5.81%.

The UK miner has seen its shares hit after the company was fined $486 million in a US market manipulation scandal. According to US prosecutors, Glencore manipulated the US oil price benchmarks and pled guilty to the charge.

Subsequently, a US district court in Connecticut issued a fine of $341.2 million and a forfeiture order for $144.4 million, which it said the company made from the scheme. The penalty is part of a major settlement above $1 billion to be made by Glencore to settle several similar investigative processes in Brazil, the UK and the US.

Investors appear not to be amused by the announcement, which was first reported on Bloomberg last Friday. This has led to the nosedive in the Glencore share price and the drop seen in Monday’s London session. Falling commodity prices due to incredible dollar strength are also putting the Glencore share price and that of other miners under pressure.

The price action is testing support at 453.40 (26 April and 23 September lows). A breakdown of this pivot targets the 440.45 support (2 August low). Further price deterioration will see 424.55 become the next target to the south, leaving 410.35 (11 July low) and 398.90 (5 July low) as additional harvest points for the bears.

On the flip side, recovery will follow a successful defence of 453.40 by the bulls. This could lead to a bounce that aims for 471.60 (28 June and 1 August highs). If the bulls successfully uncap this barrier, the 493.85 resistance enters the mix as an additional harvest point for the bulls. This barrier, formed by the 15 June/21 September highs, is the only limitation standing between the bulls and attainment of the 513.05 resistance (26 August high).