BLBG:Commodities Drop for Sixth Day as Greek Crisis Fuels Concern
Commodities fell for a sixth day in the longest losing streak since August on concern Greek leaders will back out of bailout agreements, endangering the country’s role in the euro zone and threatening the global recovery.
The Standard & Poor’s GSCI Spot Index, which tracks 24 raw materials, lost as much as 0.3 percent to 646.79 and was at 647.38 at 1:45 p.m. in Singapore. A close below 644.91 would eliminate the year’s gains. The index dropped as low as 641.8 in intraday trading yesterday as the euro extended a slump.
Raw materials fell after the head of Greece’s biggest party failed to reach an agreement on a new government, passing responsibility for forming an administration to Alexis Tsipras of the Syriza party, who said he’ll cancel the bailout. Services and manufacturing shrank in April in the euro region, and unemployment soared to a 15-year high, according to reports last week. The U.S. added fewer jobs than forecast last month, government data showed last week.
“Investors should adopt the fetal position,” said John Stephenson, who helps to manage $2.7 billion at First Asset Investment Management Inc. in Toronto, warning that commodity prices may extend declines.
Oil fell for a sixth day, the longest losing streak in almost two years, with the June-delivery contract falling as much as 66 cents to $96.35 a barrel on the New York Mercantile Exchange. June-delivery gold lost as much as 1.1 percent to $1,587.40 an ounce, and was at $1,592.30 on the Comex.
‘Off the Table’
“You’ve got U.S. growth, which looked promising, softening,” Stephenson said. “You’ve got Europe clearly in the middle of a crisis, and you’ve got China still reluctant to be accommodative. For a while, global growth is off the table.”
In Greece, Tsipras said he expected Antonis Samaras of New Democracy and Evangelos Venizelos, who leads Pasok, to revoke written pledges to implement austerity by the time he meets them today to discuss an alliance. Both rejected the call.
The euro dropped 0.2 percent to 1.2974 per dollar, an eighth day of losses. Asian stocks fell to the lowest level in more than three months. Silver and platinum declined along with all six main base metals including copper.
“Political turmoil in Greece raised concerns that the nation may not implement austerity measures and worsen Europe’s debt crisis,” Ken Kajisa, an analyst at broker ACE Koeki Co. in Tokyo, said by phone. “Risk aversion by investors increased, leading to sales of industrial commodities.”
To contact the reporters on this story: Elizabeth Campbell in Chicago at ecampbell14@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editors responsible for this story: James Poole at jpoole4@bloomberg.net; Steve Stroth at sstroth@bloomberg.net
