Another hit to commodities

A SLUMP in copper and oil is wreaking fresh havoc on the share prices of resource stocks.
Another hit to commodities Another hit to commodities Another hit to commodities Another hit to commodities Another hit to commodities

 

Kristie Batten

The Bloomberg Commodity Index fell again overnight to the lowest level zinc 1991.

Copper extended its losses, dropping a further 0.8% to $US4342 per tonne, while oil threatens to fall into the $20s.

IG market analyst Evan Lucas said oil prices were the biggest story in the market right now.

“I fully expect to see oil in the $20 a barrel handle. However, the uber-bears are now suggesting $10 a barrel is a real possibility.

“That would be a dire problem as it will bring the bankruptcy question to bare – there are several estimates that suggest prices under $30 a barrel would mean one third of US oil and gas plays would go broke in six months.”

Shares in Freeport McMoRan – which is primarily exposed to copper and oil – fell by as much as 18% in New York overnight, hitting a 15-year low.

Rio Tinto was the worst performer in London, down by nearly 2.7%.

Elsewhere, gold dropped to $1087.30 an ounce and iron ore fell to $41.19/t.

In good news, the ASX is set to open higher after a positive night for global equities.

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