BLBG:Commodities Erase Gain for Year in Worst Run Since 2008
Commodities declined for an eighth day, wiping out gains for the year, on concern that Europe’s debt crisis may worsen and as JPMorgan Chase & Co said it had a $2 billion trading loss on derivatives.
The Standard & Poor’s GSCI Spot Index of 24 commodities dropped as much as 0.8 percent to 642.04 in the worst run since December 2008, and was at 643.28 at 6:19 a.m. in London. The index fell to a low this year of 641.8 on May 8.
Oil and copper headed for second weekly losses after Jamie Dimon, chief executive at the biggest U.S. bank by assets, said the lender made egregious mistakes. Greece has been unable to form a government since May 6 elections and Spain took control of the its fourth-biggest bank this week, driving the euro lower.
“The optimism we had at the end of 2011 that created a firm footing for a lot of commodities has slowly eroded,” said Jonathan Barratt, chief executive of Barratt’s Bulletin, a commodity-markets newsletter in Sydney. “The outlook remains mixed to negative.”
Oil for June delivery in New York declined as much as 1.3 percent to $95.78 a barrel and traded at $96.06. Brent fell as much as 0.9 percent to $111.76 a barrel in London. Crude accounts for 51.4 percent of the GSCI Spot Index, according to weightings on Standard & Poor’s Ratings Services’ website.
Three-month copper dropped as much as 0.7 percent to $8,050.50 a metric ton on the London Metal Exchange, and traded at $8,068.75. Spot gold fell as much as 0.6 percent to $1,584.35 an ounce, near the lowest level in four months.
Monthly Losses
The S&P GSCI declined in March, April and this month, overturning gains for the year of as much as 11 percent, as growth in China, the largest user of energy and metals, expanded in the first quarter at the slowest pace in almost three years. Over the past decade, the index had its sole annual loss in 2008, tumbling 43 percent, as the world economy sank in recession.
The euro slid to a three-month low before Italy, Spain and France sell bonds next week amid concern the crisis is deepening. The currency, which was at $1.2922, is set for a second weekly loss. More than 50 percent of investors predict a nation will exit the euro this year, according to a Bloomberg Global Poll.
“Regardless of whether Greece exits the euro, it will take a lot of time to resolve the region’s debt crisis,” said Daisaku Ueno, a senior foreign-exchange and fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities Co.
Commodity exchange-traded products had $1 billion outflows in April, led by withdrawals from precious metals and energy, Societe Generale SA analysts led by Alain Bokobza said yesterday. “Commodities saw large outflows last month due notably to the gradual landing of the Chinese economy,” they wrote in a report.
Inflation in China was 3.4 percent in April, below the government’s full-year target for a third month, the National Bureau of Statistics said today. That may give Premier Wen Jiabao more leeway to stimulate the economy.
To contact the reporter on this story: Chanyaporn Chanjaroen in Singapore at cchanjaroen@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
