An employee checks copper anode plates in the tankhouse at the Aurubis AG metal... Read More
Copper tumbled 5.4 percent by 6:45 a.m. in New York. The Bloomberg Commodity Index (BCOM) lost 0.8 percent. The Stoxx Europe 600 Index fell 0.5 percent, recouping some earlier losses after the European Union’s top court said a bond-buying program may only require fine tuning to bring it in line with EU law. Standard & Poor’s 500 Index futures slid 0.3 percent. The yen rose versus its 16 major peers, gaining most against Australia’s dollar. Ten-year Treasury yields fell to the least since May 2013.
Commodity prices are tumbling as a supply glut collides with
waning demand, reducing earnings prospects for producers and increasing the appeal of bonds as inflation slows. The World Bank cut its global growth outlook, citing weak expansions in Europe and China. JPMorgan Chase & Co. and Wells Fargo & Co. are set to report earnings today.
“Oversupply and falling demand are dragging down commodities beyond oil,” said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank Ltd. in Tokyo, which oversees $325 billion. “There are a lot of uncertainties and it’s hard to see a reversal in sentiment for the time being. As an investor it’s hard to proactively take on risk at the moment.”
Copper for delivery in three months on the London Metal Exchange dropped as much as 8.7 percent to $5,353.25 a metric ton, the lowest intraday price since July 2009. Nickel slid 4.6 percent and lead fell 3.8 percent to the lowest in more than two years.
Risk-Off
“There is a broad-based risk-off sentiment in financial markets,” Jens Naervig Pedersen, a commodities analyst at Danske Bank A/S, said by e-mail from Copenhagen today. “This is highlighted by the set-back in the copper price and weak performance in equity markets.”More than two shares declined for every one that advanced in Stoxx 600, with trading volumes 38 percent greater than the 30-day average, according to data compiled by Bloomberg.
A gauge of basic-resource companies lost the most among 19 industry groups in the broader gauge, posting the biggest decline since November 2011. Anglo American Plc fell 9.1 percent, and Glencore Plc slid 11 percent to a record.
Miners and metal producers led an increase in the cost of insuring European corporate debt, with credit-default swaps on Glencore rising 9.5 basis points to an almost nine-month high of 171 basis points, and contracts on Anglo American climbing 10 basis points to 180, the highest since March.
Tesco Climbs
Jeronimo Martins SGPS SA rallied 10 percent after the grocer said fourth quarter like-for-like sales grew in both Portugal and Poland. Tesco Plc added 2.6 percent after billionaire investor Bill Ackman said he considered investing in the U.K. retailer.Tesla Motors Inc. declined 7.1 percent in early New York trading after saying China sales were unexpectedly weak in the fourth quarter.
The MSCI Emerging Markets Index slid 0.5 percent. Mining companies dragged South Africa’s benchmark 2 percent lower, the biggest drop among major emerging markets.
Jiangxi Copper Co., China’s largest producer of the industrial commodity, sank 5.9 percent, the most since May 2012, and KGHM Polska Miedz SA, Poland’s sole copper producer, tumbled 6.6 percent, this biggest drop since July 2013 on a closing basis. The Shanghai Composite Index slid 0.4 percent and The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong dropped 0.5 percent. Poland’s WIG20 Index fell 0.9 percent.
Russia Rating
Russia’s ruble declined for a fourth day, weakening 1.1 percent against the dollar. The dollar-denominated RTS index of stocks lost 0.2 percent, and the Micex added 0.6 percent.The probability that S&P will cut Russia’s credit rating to below investment grade is “fairly high,” Economy Minister Alexei Ulyukayev said in Moscow. S&P signaled last month it may drop the country below investment grade within 90 days.
The slump in copper hauled down currencies of commodity-producing nations as it spread through foreign-exchange markets.
The Aussie fell 0.5 percent to 81.27 U.S. cents, extending its drop in the past six months to more than 13 percent. Canada’s loonie weakened past C$1.20 per dollar for the first time since April 2009 and was last at C$1.1981.
Haven Demand
Bonds rallied as the drop in metals and oil prices damped the outlook for inflation, boosting the allure of fixed-income assets. Annual inflation in France fell to 0.1 percent in December, the lowest since 2009, data showed today.The U.S. 30-year yield fell three basis points, or 0.03 percentage point, to 2.47 percent, approaching the record low of 2.44 percent set in July 2012. Ten-year yields also dropped three basis points, to 1.87 percent after falling as low as 1.85 percent.
Yields in Japan and Australia, France and the U.K. also fell to record lows.
No comments:
Post a Comment