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Commodity price slump triggers investor caution

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Risk-off sentiment among global investors hits equity markets, demand for gold rises

BS Reporters  |  Mumbai  May 5, 2017 Last Updated at 19:10 IST

The slump in triggered risk-off sentiment among global investors hitting equity and pushing up demand for safe-haven assets like Most Asian and European dropped on Friday, while the gained against most emerging market currencies.

The benchmark lost 267 points, or 0.9 per cent to end at 29,858.8, while the index fell 74.6 points, or 0.8 per cent to close at 9,285.3. The rupee fell 0.3 per cent to close at 64.37 against the Foreign investors sold shares worth Rs 364 crore. Commodity and oil stocks witnessed selling.

While and other were seen stabilising on Friday, the weekly losses were enough to spook investors, raising concerns over the health of the global economy.

A five per cent drop during the week, saw oil prices fall to their lowest level since November 2015, erasing all gains since the Organization of Petroleum Exporting Countries (Opec) signed a six-month deal to curb production and ease a global glut. Surging shale gas output in the US was seen as the trigger for slump in oil prices. Higher US output threatened offset the supply cut by and Russia.

The fall in oil prices spread to all other Iron ore lost 12 per cent during the week in Singapore, its sharpest fall since November when prices had come off on concerns over China demand. traded at lowest level in five months at $5,567 per ton. too fell to lowest level in a month at $2,578, traded at 11 month low of $ 8,960.

Domestic oil explorers ONGC and Oil India fell nearly three per cent each. Commodity stocks Hindalco, Vedanta and Hindustan dropped nearly four per cent each.

“Oil prices have seen a drastic fall of more than 10 per cent in the past few weeks. With high oil inventories in the US at around 530 million barrels, and other producers are ruling out deeper supply cuts,” said Prathamesh Mallya, chief analyst at Angel

Experts said the fall in the and the increasing risk-off bets are due to concerns over US policies.

“US President is at tug of war with with his publicly stated view of keeping interest rate low and not favoring strong He faces similar issues in general with US administration. This has shaken the hedge funds confidence. Prices will stabilise when confidence returns in Trump policies,” said T Gnanasekar, director, CommTrendz Research, a risk advisory firm.

Commodity price slump triggers investor caution

Risk-off sentiment among global investors hits equity markets, demand for gold rises

The slump in commodity prices triggered risk-off sentiment among global investors hitting equity markets and pushing up demand for safe haven assets like gold. Most Asian and European markets dropped on Friday, while the dollar gained against most emerging market currencies. The benchmark Sensex lost 267 points, or 0.9 per cent to end at 29,858.8, while the Nifty 50 index fell 74.6 points, or 0.8 per cent to close at 9,285.3. The rupee fell 0.3 per cent to close at 64.37 against the dollar. Foreign investors sold shares worth Rs 364 crore. Commodity and oil stocks witnessed selling.While oil and other commodity prices were seen stabilising on Friday, the weekly losses were enough to spook investors, raising concerns over the health of the global economy. A five per cent drop during the week, saw Brent oil prices fall to their lowest level since November 2015, erasing all gains since the Organization of Petroleum Exporting Countries (Opec) signed a six-month deal to curb production … The slump in triggered risk-off sentiment among global investors hitting equity and pushing up demand for safe-haven assets like Most Asian and European dropped on Friday, while the gained against most emerging market currencies.

The benchmark lost 267 points, or 0.9 per cent to end at 29,858.8, while the index fell 74.6 points, or 0.8 per cent to close at 9,285.3. The rupee fell 0.3 per cent to close at 64.37 against the Foreign investors sold shares worth Rs 364 crore. Commodity and oil stocks witnessed selling.

While and other were seen stabilising on Friday, the weekly losses were enough to spook investors, raising concerns over the health of the global economy.

A five per cent drop during the week, saw oil prices fall to their lowest level since November 2015, erasing all gains since the Organization of Petroleum Exporting Countries (Opec) signed a six-month deal to curb production and ease a global glut. Surging shale gas output in the US was seen as the trigger for slump in oil prices. Higher US output threatened offset the supply cut by and Russia.

The fall in oil prices spread to all other Iron ore lost 12 per cent during the week in Singapore, its sharpest fall since November when prices had come off on concerns over China demand. traded at lowest level in five months at $5,567 per ton. too fell to lowest level in a month at $2,578, traded at 11 month low of $ 8,960.

Domestic oil explorers ONGC and Oil India fell nearly three per cent each. Commodity stocks Hindalco, Vedanta and Hindustan dropped nearly four per cent each.

“Oil prices have seen a drastic fall of more than 10 per cent in the past few weeks. With high oil inventories in the US at around 530 million barrels, and other producers are ruling out deeper supply cuts,” said Prathamesh Mallya, chief analyst at Angel

Experts said the fall in the and the increasing risk-off bets are due to concerns over US policies.

“US President is at tug of war with with his publicly stated view of keeping interest rate low and not favoring strong He faces similar issues in general with US administration. This has shaken the hedge funds confidence. Prices will stabilise when confidence returns in Trump policies,” said T Gnanasekar, director, CommTrendz Research, a risk advisory firm.

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