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Global Economy – Recession Fears Plummet Commodities

By on October 3, 2011

Commodities recorded their biggest drop since year-end 2008 as a result of dull macro-economic data released from US, China and Euro-zone late last week.  According to Bloomberg, a measurement of Chinese manufacturing has shrank for the third straight month, the longest time period of consecutive decline since 2009.

September also marked the highest hike in Euro-zone inflation rates due to serious concerns of another sovereign debt default crisis.
Prices and futures for energy, metal and crops hit new lows, in some cases the lowest in one year, all amidst concerns that Greece will default on its sovereign debt obligations as the country is projected to miss debt reduction targets .

The ICE Futures Europe and the Commodity Futures Trading Commission’s Commitments of Traders released reports indicating hedge funds and money managers, across money markets in Europe, Asia and the United States, have begun to make reductions in their bullish bets on oil.

Whilst speculative bets that crude oil prices will rise continue to outnumber the bets that prices will fall, there is an ongoing correction in wagers by market participants on the London based ICE Futures Europe.

Demand for commodities does not show any promising signs of increase amidst the ongoing concerns that the global economy is headed for another recession.

Gold is one of the only commodities posting growth numbers as investors seek out the precious metal as an alternative holding to equities and currencies.