Commodities slump to 16-year low led by oil slide
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.