Thursday, 15 December 2011

Commodities plunge

Markets fell on Wednesday, with commodities being hit especially hard. Bloomberg reports:

The Standard & Poor’s 500 Index fell 1.1 percent to close at 1,211.82 at 4 p.m. in New York. The Stoxx Europe 600 Index lost 2.1 percent. The euro weakened as much as 0.7 percent to $1.2946 before trimming losses to trade at $1.2981... Ten-year U.S. Treasury yields lost seven basis points to 1.89 percent, while 30-year German bund rates reached a euro-era record low of 2.38 percent...

Oil in New York declined 5.2 percent to $94.95 a barrel as the Organization of Petroleum Exporting Countries agreed to raise its production ceiling, moving the group’s supply target nearer to current output levels. Silver plunged 7.4 percent, gold lost 4.6 percent to $1,586.90 an ounce and copper sank 4.7 percent. Only lean hogs rose among 24 commodities tracked by the S&P GSCI Index, sending the gauge down 4.1 percent for its biggest drop since September.

At least the fall in commodity prices should ease inflation concerns. Import prices in the US had increased 0.7 percent in November while India's inflation rate read 9.11 percent in November, albeit slower than 9.73 percent in October.

Inflation is apparently not a concern at Norway's central bank, which lowered its overnight deposit rate on Wednesday to 1.75 percent from 2.25 percent, the biggest cut since May 2009.

Indeed, economic reports on Wednesday suggest that weak economic growth is the primary concern.

Industrial production in the euro area fell 0.1 percent in October, its second consecutive monthly decline.

The number of people out of work in the UK rose to its highest level in more than 17 years in the three months to October.

Lending and money supply growth in China slowed in November. At its annual economic planning meeting, China's leaders agreed to guarantee steady growth while maintaining policies to "make housing prices return to a reasonable level".

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