As the week starts, commodity markets continue to remain in despair and lingering in the broader weakness. Continuing political unrest in Greece, concerns over Spain’s banking sector and news of US bank giant JP Morgan’s $2bn losses reignited weak sentiments in all commodities.
Increasing the possibility of a new election in Greece worsened the crisis in debt laden Euro zone economy. Spot gold fell below $1560 an ounce after an initial consolidation session due to a surge in the dollar. The dollar rose to eight week high against a basket of currencies.
NYMEX crude oil fell below $94 a barrel, the weakest level since December, owing to worsening Euro zone debt crisis and Saudi Arabian energy minister’s comment that prices would decline further. At the same time, Brent crude oil also extended weakness by falling more than $2 a barrel to the lowest level in nearly four months. Base metal complex in LME shed more than one percent.
Copper is the worst performing counter in LME which pulled down to a four month low. Despite weak Euro, slowing growth prospect of China also put pressure on base metal prices. In LME, copper for three month delivery fell below $7850 a ton mark; it’s lowest since January 2012.
European shares traded lower after Greece’s failure to set up a government. In the meantime Spain sold 2.2 billion Euro worth Treasury bills at a yield of 2.985 percent, up from 2.623 percent compared to last month.
Market sentiments were morose after ambiguous elections left Greece in a political impasse which may threaten austerity measures and reignite concerns over a possible exit from the Euro zone.
The reports of 2$bn trading loss incurred by US bank giant JP Morgan Chase & Co. in the last week, shed global equities broadly on speculation that global growth will falter again. Concerns over China’s Industrial output in April and India’s negative IIP data showcased last
Friday impaired most of the global commodities. Into the evening, the market is crucially watching the ECB Bond purchase announcement & Euro Area Finance ministers meet could bring more volatility into global markets.
This week could see a plethora of data with ECB’s monetary policy conference and U.S FOMC meeting minutes. Also in the limelight, the GDP data from Germany and Euro zone, releasing on Tuesday could give a clear indication whether the European Union may enter into a recession.
Gold, crude oil and the euro all tumbled in the US session as investors turned more and more negative on the EU. The USD gained momentum against all of its partners.
Gold plummeted 23.05 to trade at 1560.95 as oil followed it down to end up of -1.83 at 94.30 after Saudi oil minister said that oil was still priced to high and that OPEC would continue pumping oil until prices were more in line.
The euro was trading at 1.2835 and falling.