The Australian share market has had $60 billion wiped off the value of its shares in the worst one-day drop since the Global Financial Crisis more than six years ago. The market finished the day more than four percent lower than when it started, the fall having accelerated as soon as Asian markets opened. Shanghai’s market lost 11.5 percent last week, and plunged a further eight percent today.
While the Asian markets continue to fall, others will follow, however it will be interesting to see the effect that it has to those of us “on the ground”. We have been saying for some months that traders and manufacturers in China have been skeptical about the market and as a result, have not been looking to buy more raw material than is needed. It’s possible that many of the falls that we are currently seeing are more of a correction than a crash as the financial markets catch up with what manufacturers and traders have been saying for months.
Overnight copper fell below USD 5000 & Nickel below USD 10,000. The same day 12 months ago copper was USD 7,100 and Nickel was USD 18,625 The Australian Dollar currently trades at 71.48 which is taking some of the sting out of falling commodity prices.
Please find the following for your perusal;
**** Financial panic spreads as ‘Black Monday’ sees billions wiped off world markets ****
Financial markets around the world have endured one of their worst days since the 2008 financial crisis, sparked by increasing concern that China’s slowing economy will drag down the global economy with it.
Several European markets sank more than seven per cent in afternoon trades on Monday, while US stocks tumbled at the open with the Dow dropping more than three per cent.
**** DJ Copper Marks Fresh Six-Year Low on Stocks Plunge **** By Tatyana Shumsky
Copper fell to its lowest level since mid-2009 amid a global selloff in stocks that was triggered by fresh concerns about slowing economic growth in China.
Copper prices have been battered by bearish traders in recent months as many wagered that China’s economic growth was losing steam. China is the world’s top copper consumer, accounting for about 40% of global copper demand. But in recent months, economic data has pointed to slower manufacturing and construction, triggering worries about future metal purchases.
On Monday, the Shanghai Composite fell 8.5%, posting its largest daily drop since February 2007 and erasing its gains for the year. The losses came amid escalating fears that the slowdown in China’s growth is sharper than previously thought.
“Copper is a market that should be quite weak if you look at the Chinese situation and the potential weaker demand there,” said Bill O’Neill, co-founder of commodities investment company Logic Advisors. “Copper knows that the Chinese economy is staggering from previous growth rates, and that’s already reflected in the price,” he added.
The selloff in European and U.S. equities, which followed on from the losses in China, added to the pressure on copper. Stocks and copper often move in the same direction as both are sensitive to shifts in expectations for global economic growth.
“Not only China, but the rest of the global economy is on a slippery footing right now. As we have it now, there’s no reason to rush in and buy copper,” said James Cordier, president at OptionSellers.com.