Commodities fell the most in two weeks as signs of a faltering U.S. economy and escalating debt woes in Europe signaled less demand for energy and metals.
The Standard & Poor’s GSCI Spot Index (MXWD) of 24 raw materials declined 2.4 percent to settle at 605.15 at 4:17 p.m. in New York, the biggest decline since June 21. Crude oil and gold dropped the most in two weeks, and industrial metals including lead, aluminum and copper slumped.
Employers in the U.S. hired fewer workers than forecast in June, indicting the labor market is making little progress toward reducing joblessness, government data showed today. Global equities extended losses, and Spain’s 10-year bond yields reached 7 percent as industrial production fell for the ninth straight month. The dollar rallied, eroding the appeal of raw materials.
“We had some weakness in Europe in the form of rising rates on Spanish debt, and then we had the disappointing payroll number here,” Walter “Bucky” Hellwig, who helps manage $17 billion of assets at BB&T Wealth Management in Birmingham, Alabama, said in a telephone interview. “Going into the weekend, it’s ‘risk off’ for commodities.”
The GSCI index has dropped 6.2 percent this year, led by cotton, coffee and oil. The MSCI All-Country World Index has gained 3.9 percent, and Treasuries returned 2 percent, a Bank of America Corp. index showed.
Wheat, corn and soybeans posted the first losses in a week. Grains surged in the past month as a heat wave in the U.S. Midwest eroded prospects for crops.
The “whole global growth issue” on the economy means agriculture products joined other commodities in today’s slump, Hellwig said.
“We’re going to go into a weekend where people aren’t sure whether it’s going to be better or worse on Monday,” Ron Lawson, a managing director at Logic Advisors, a commodity consultant in Sonoma, California, said in a telephone interview. “When in doubt, you sell.”
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