Our market is heading for a weak opening this morning after another sell off in global metals rocked markets overnight.
At one stage copper prices were within a whisker of hitting $US2 a pound on Comex in New York, and another selling bout like last night will see that historic level breached in coming sessions.
The Bloomberg commodity index fell with the falls in metal prices and hasn’t been this low for 16 years. The Thomson Reuters Core Commodity CRB index hit its lowest since November 2002. The index is down more than 20% in 2015 so far.
And iron ore for immediate delivery in northern China fell 1.8% to $US44.20 a tonne, from the Friday close of $US45.00 a tonne. That is 10 US cents away from the 10 year low of $US44.10 set in early July. Wall Street closed on a weakish note overnight Monday, retreating from last week’s strong gains as metals sold off.
The S&P 500 closed 3 points, or 0.1%, lower at 2,086. The Dow was down 32 points, or 0.2%, to 17,792. The Nasdaq Composite ended the day down 2 points, or less than 0.1%, at 5,102.
It was not a day of encouragement for investors, though trading volumes were light in what is a holiday shortened week for some major markets such as the US and Japan.
An eight-month high for the US dollar was the major factor in the sell-off as markets await the now expected rise in US official interest rates next month by the Fed. Nickel prices on the London Metal Exchange hit new 12 year lows and gold sold off to where it is again in sight of last week’s six year low.
Global oil prices sold off sharply as well, but rebounded when desperate traders grabbed remarks from Saudi Arabia about how it would work with other Opec producers and sent prices higher.
But on later reflection, those remarks were seen to be little different than previous comments and prices for US crude settled lower, while Brent crude ended a touch higher on the day, but looking to go lower in trading today.
Copper futures slumped to six-year lows for the third session in a row in London on Monday, as the dollar appreciated and investors sold down their positions. In New York Comex copper ended at just over $US2.02 a pound, down 2% on the day (it had been down more than 3% at one stage).
The London Metal Exchange’s three-month copper contract was down 2.3% at $US4,474 a tonne in midmorning trade, having slipped below the key $US4,500 a tonne level for the first time since May 2009.
In the boom times of 2011, copper traded above $US10,000 a tonne, since when it has lost 55% of its worth. Aluminium fell 1.3% to $US1,447 a tonne and nickel plunged 5% to $US8,340 a tonne, after hitting a 12-year trough. Zinc lost 2.9%, giving up gains made on Friday after Chinese smelters announced plans to cut production. Lead prices fell 1.8% to $US1565 a tonne, a five an a half year low.
The share prices in major miners dropped – BHP lost 1.6% in London after the 2.1% slide here on Monday, Rio shares fell 1,6%, Glencore was down 2% and Anglo American 1.2%. The shares of these and other miners saw larger falls during a volatile day of trading.
