Commodity prices hit by economic gloom

Commodity prices hit by economic gloom

Oil and metal prices remained volatile today after a cocktail of gloomy economic data from across the world triggered a massive sell-off.

An unexpected jump in unemployment claims in the US, a surprise fall in German factory orders and signs that China and India's economic growth engine was running out of steam saw commodity prices tumble yesterday.

In the final throes of trading in New York, oil prices fell 9% to 98 US dollars a barrel, dropping below the US$100 mark for the first time since mid-March, while silver plunged 8% and gold dropped 2.3%.

The sell-off appeared to stabilise as Asian traders took advantage of lower prices but prices wavered as the London session got under way today.

The slide on commodity markets follows a surge in prices since the start of the year.

Crude oil rocketed as turmoil spread across North Africa and the Middle East, restricting the flow from some of the world's key suppliers.

A fall in oil prices will ease inflationary pressures, including in the UK, where policymakers are struggling with a mix of sluggish growth and the high cost of living.

Commodity prices have been dropping all week but yesterday's slump came after the US Labour department said unemployment claims rose by 474,000 last week, after economists predicted a drop of 410,000.

Elsewhere, Germany's Federal Ministry of Economy and Technology revealed an unexpected drop in industrial orders.

The figures are particularly troubling as Germany has led the recovery in Europe by focusing on industrial production, shipping products such as cars to hungry emerging markets.

But fears over waning demand in emerging markets - most notably in China and India - also bore down on commodity markets.

China and India have been forced to raise interest rates to dampen runaway domestic consumption and surging inflation.

Matthew Nelson, a trader at Spreadex, said the markets were in for a "bit of a ride".

He said: "With silver falling around 30% from its recent all-time highs, and all other metals following a similar path due to global demand fears, traders are concerned about the near-term growth prospects of companies."

More on this topic

Shell warns of up to €20bn hit to assets after oil price slumpShell warns of up to €20bn hit to assets after oil price slump

Oil major BP sells petrochemicals arm for €4bn in move towards greener energyOil major BP sells petrochemicals arm for €4bn in move towards greener energy

Providence Resources targets more licences off south coastProvidence Resources targets more licences off south coast

Shell cuts dividend for first time since World War IIShell cuts dividend for first time since World War II

More in this Section

Ireland's trade fair organisers seek clarity on when they can reopenIreland's trade fair organisers seek clarity on when they can reopen

Ireland sees sharp gain in construction activity recorded in JuneIreland sees sharp gain in construction activity recorded in June

Europe looks to ‘messy’ earnings that may test market’s optimismEurope looks to ‘messy’ earnings that may test market’s optimism

John Moran: Politicians must write the recovery plan, not bankersJohn Moran: Politicians must write the recovery plan, not bankers


Lifestyle

Conservationist Giles Clark takes on the illegal wildlife trade, as well as the task of building a bear sanctuary in Laos, South-east Asia, in BBC Two series Bears About The House.Five minutes with ... Giles Clark

Forget G-spots. Let's focus on the C-spot and close the orgasm gap once and for all.Sex File: The G-spot is dead. Long live the C-spot

Workshop leaders from the West Cork Literary Festival offer tips for writing in areas such as biography, short stories and travel, writes Des O’DriscollSo you want to be a writer?

'He told us we were so scared of dying, we forgot how to live” - Guru: The Dark Side of Enlightenment is this week's podcast pickPodcast Corner: Guru tells of sweat-lodge tragedy and James Arthur Ray

More From The Irish Examiner