Business | Markets
Commodities fall after 4% surge on G20 agreement
Commodity markets ticked down on Friday, pausing for breath after a rally inspired by a trillion-dollar deal by G20 world leaders to halt the worst recession in decades faltered, with attention turning again to economic data.
- Reuters
- Published: 23:01 April 3, 2009
Singapore: Commodity markets ticked down on Friday, pausing for breath after a rally inspired by a trillion-dollar deal by G20 world leaders to halt the worst recession in decades faltered, with attention turning again to economic data.
Oil and LME copper fell more than 1 per cent from the previous day, while gold barely budged.
On Thursday the Reuters-Jefferies CRB commodities index, which tracks 19 futures markets, settled up almost 4 per cent on the back of an equities rally inspired by the G20 agreement and new rules concerning valuation of toxic assets at US banks.
World leaders announced a $500 billion (Dh1,837 billion) injection for the International Monetary Fund, plus $250 billion in IMF Special Drawing Rights and $250 billion to boost trade.
"The overall market outlook is quiet in Asia. I think the market has discounted the news about the announcement of G20," said Louis Lok, a dealer at Bank of China in Hong Kong.
"The next focus is the US announcement of the nonfarm payrolls data," and its impact on metals, stock and currency markets, Lok said.
Investors will be training their eyes on US March unemployment, non-farm and manufacturing payrolls data, due later yesterday.
Analysts polled by Reuters forecasting that US nonfarm payrolls shrank by 650,000 in March, nearly matching a fall of 651,000 in February, suggesting the ailing US economy probably continued to bleed jobs at a rapid rate.
Oil slid to just over $52 a barrel, retreating from the previous session's near 9 per cent surge - its largest one-day percentage gain in three weeks - as expectations of a continued weakness in near-term energy demand prompted investors to take profit.
By 0458 GMT, US light crude for May delivery had fallen 59 cents to $52.05 a barrel, while London Brent crude was down 54 cents at $52.21.
"For oil markets a look at the inventory numbers will immediately raise doubts on whether a sustained rally is warranted," said Toby Hassall, head of research at Commodities Warrants Australia.
Data on Thursday showed US crude stocks rising again to a fresh 16-year high due to higher imports, while products inventories also surprisingly increased amid lower demand.
Three-month copper on the London Metal Exchange, dipped $55 to $4,115, having touched a five-month peak at $4,187.50 on Thursday. Shanghai copper for June delivery fell 0.4 per cent to 34,210 yuan a tonne at midday, after earlier touched 34,680 yuan, its highest since October.
"Copper is down a little today, but remember prices have risen nearly 50 per cent from the lows. After that kind of rally we should expect a pause as people weigh whether the econ-omic outlook supports the rise in prices," said Jonathan Barratt, managing director of Commodity Broking Services.
Prices were still up around 2 per cent last week in London and 3 per cent in Shanghai.
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