Com­modi­ties slump to 16-year low led by oil slide

The China Post - - BUSINESS INDEX & -

Oil fu­tures led a dra­matic fall in com­mod­ity prices on Mon­day, with U.S. crude trad­ing be­low US$40 a bar­rel as fears over main­land China’s econ­omy sent in­vestors flee­ing to safe havens like gold.

The Bloomberg Com­mod­ity In­dex, which tracks 22 raw ma­te­ri­als, lost as much as 1.7 per­cent to 86.3542 points to its low­est level since Au­gust 1999.

Raw ma­te­ri­als have slumped this year as con­cerns have mounted of weak­en­ing de­mand from China, the world’s sec­ond-largest econ­omy and top user of ev­ery­thing from in­dus­trial met­als and energy to food.

Fears were piqued when China de­val­ued the yuan two weeks ago, a move many took as a sig­nal the econ­omy is in worse shape than thought, and which could hurt the Asian gi­ant’s pur­chas­ing power for U.S.dol­lar-de­nom­i­nated com­modi­ties.

Con­cerns China’s slow­down will also dam­age the world econ­omy have sent fi­nan­cial mar­kets into a tail­spin, with Shang­hai stocks on Mon­day plung­ing the most in one day since 2007 — lead­ing a rout across Asia — while Asia-Pa­cific cur­ren­cies tum­bled.

Re­sources stocks tum­bled, with BHP Bil­li­ton clos­ing down 5.02 per­cent at AU$22.89 while Fortes­cue lost 14.62 per­cent to AU$1.64 af­ter post­ing an 88 per­cent drop in an­nual profit on weaker iron ore prices.

“The steep fall in com­modi­ties to­day is all down to bear­ish sen­ti­ment about China with the huge rout in its eq­ui­ties mar­ket,” Daniel Ang, in­vest­ment an­a­lyst at Phillip Fu­tures in Sin­ga­pore, told AFP.

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