Commodities Join Global Sell-Off Amid Recession Fears
In a tumultuous day for the markets, commodities such as oil, natural gas, metals, and agricultural products took a hit alongside equities as fears of a US recession loomed large, sparking concerns over demand. The losses were widespread and significant, reflecting the growing unease among investors.
China’s Economic Woes Weigh Down Commodities
The recent downturn in commodities can be attributed in part to China’s sluggish economy, with crude oil plummeting by around 5 percent last week, copper hitting a four-month low on the London Metal Exchange, and corn reaching its lowest point since 2020. The downward trend has been evident for weeks, signaling a broader trend of negative momentum in the market.
Geopolitical Factors Provide Some Support for Oil
Despite the overall bearish sentiment, crude oil managed to hold its ground on Monday, dropping only 1-1.5 percent in volatile trading. Geopolitical tensions in the Middle East and speculation that OPEC will maintain output cuts helped cushion the blow, providing some support for oil prices amid the broader market turmoil.
Copper Prices Plummet on Weakening Demand Outlook
Copper prices took a nosedive, plunging over 3 percent to 4-1/2 month lows as concerns about dwindling demand in China and the US rattled investors. The metal, widely used in power and construction, faced a sell-off as the world’s two largest economies grappled with economic uncertainties.
European Gas, Power, and Carbon Contracts Slide
The sell-off extended to European gas, power, and carbon contracts, with prices dropping across the board. European benchmark gas prices for the upcoming month plummeted by more than 5 percent, reflecting a combination of increased supply and tepid demand exacerbated by market panic.
Agricultural Markets Feel the Pinch
The turmoil in the markets spared no sector, as agricultural markets also saw significant declines. Wheat, corn, soybeans, and sugar all faced downward pressure, with wheat dropping by 3-3.5 percent, corn by 1.5 percent, soybeans by 1 percent, and sugar reaching a nearly two-year low. The widespread sell-off underscored the pervasive uncertainty gripping global markets.