Oil leads mar­ket as China sends in­vestors flee­ing

The Pak Banker - - BUSINESS -

LON­DON: Com­mod­ity mar­kets lurched lower on Mon­day af­ter Chi­nese eq­ui­ties re­sumed their slide, fuelling wor­ries of a hard land­ing in the world's big­gest con­sumer of raw ma­te­ri­als. Crude oil tum­bled to its weak­est lev­els in 61/2 years while in­dus­trial met­als prices also hit multi-year lows amid a broad sell-off of risky as­sets. In­vestors took flight af­ter the Chi­nese stock mar­ket posted its big­gest one­day loss since the height of the global fi­nan­cial cri­sis in 2007, plung­ing more than 8 per­cent. The 19-com­mod­ity Thom­son Reuters/Core Com­mod­ity CRB In­dex . TRJCRB has shed more than 16 per­cent so far this year.

Oil led the down­ward charge as Brent crude fu­tures LCOc1 fell more than $2 a bar­rel to their low­est since March 2009. "To­day's falls are not about oil mar­ket fun­da­men­tals. It's all about China," Carsten Fritsch, se­nior oil an­a­lyst at Com­merzbank in Frank­furt, told Reuters Global Oil Fo­rum. In met­als, cop­per CMCU3 and alu­minum CMAL3 hit their low­est since 2009 while iron ore and steel fu­tures in China slid sharply to reach their down­side limit. Three-month cop­per on the Lon­don Me­tal Ex­change CMCU3 fell as much as 3 per­cent to $4,903 a tonne, its low­est since July 2009. Cop­per has shed 22 per­cent in 2015, on track for its third con­sec­u­tive yearly fall. Gold edged down, but re­mained close to a seven-week high as the dol­lar and shares tum­bled. Spot gold XAU= shed 0.5 per­cent to $1,154.81 an ounce as in­vestors took prof­its af­ter the me­tal hit its high­est since July 7 on Fri­day. "Gold is hold­ing on to some of the gains it made last week and that speaks to the dif­fi­culty in the global eq­uity mar­ket right now," Mit­subishi Corp strate­gist Jonathan But­ler said.

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