Commodities, mining stocks sinking as China devalues its currency again
Most commodities, from industrial metals to oil, were crashing on Wednesday after China decide to devalue its currency for the second day in a row, renewing concerns about growth in the world’s largest consumer of raw materials.
Copper fell about 7%, going under $5,100 per tonne on the LME for the first time since July 2009, to a session low of $5,062. It was last at $5,117, down $8 on the previous day’s close. In New York, it was slightly up (0.35%) to $2.340 a pound at 9:10 am ET.
Oil prices steadied after falling almost 3% on Tuesday, back below $50 a barrel. The recovery was triggered by an upbeat report from the IEA balanced the bearish impact of a further weakening of the Yuan and disappointing Chinese industrial output data.
Mining stocks fell again Wednesday, capping a miserable month for the sector. Once again Glencore (LON:GLEN) led the slump, as its shares dropped nearly 6%, driven down by concerns that the weak copper prices and general market conditions are straining the firm’s finances, ahead of first-half results next week.
BHP Billiton (ASX:BHP), was down 4.3% and rival Rio Tinto (ASX:RIO) was trading almost 3% lower than Tuesday in Sydney at 9:25 am ET.
However, gold is profiting from the situation, heading for its longest winning streak in three months.
Bullion prices were moderately better on Wednesday morning, hitting another three-week high in New York, on safe-haven demand and a less-bearish near-term chart posture.
The precious metal gained about 1.14%, or $11 an ounce to as high as $1,120.80.
Despite a surge in the US dollar, against which the Yuan is fixed and which usually moves in inverse correlation to the precious metal, gold has recorded four positive sessions in a row.