Finance: Recession Fears Hit Commodities Market

Commodities prices fall on FTSE 100

Commodities prices fall on FTSE 100

Early trading on Monday showed prices on FTSE commodities fall due to persistent investor fears of a global recession.

Falling rates

The blue chip index was down 24.25 points this morning, or 0.5% at 5,042.59. This was a step up from an earlier session low of 4,974.03.

Concerning last week’s totals, the FTSE 100 index acquired 0.4% on Friday, but had lost 5.6% over the course of the financially volatile week.

The biggest sliders were metal miners Fresnilo and Randgold Resources, down 7.5% and 3.9% respectively. The collapsing price of gold has pushed the precious metal miners down, as investors are currently favoring the dollar and U.S. Treasuries over the “safe haven” gold.

The bullion fell by $100 an ounce on Friday.

Chilean copper mining corporation Antofagasta also saw high rates of decline on the FTSE 100; it is down 4% as copper prices reach 14-month lows in Shanghai trading. Copper, unlike gold, is worth only what it is purposed for, and worries of demand falling has sent the copper market spinning.

Further falls predicted

Furthermore, JPMorgan Cazenove forecasts a 10-15% risk of further falls for UK miners whose equity and commodity prices reflect one another. However, it believed that stronger balance sheets would bring valuations above 2008/09 levels.

“We still believe the foundations of the supercycle are in place and therefore see this sell-off as an opportunity in waiting,” commented the broker.

Crude oil prices dropped even further today, after falling to a six-week low on Friday. Royal Dutch Shell lost 2.2%.

BP lost much less in comparison, but still suffered a 0.4% downslide. Despite its slight loss, the board of BP’s Russian joint venture, TNK-BP, has approved a new $1.25 billion dividend payout to shareholders.

In the banking sector, banks that are partially state-owned led, as Lloyds Banking Group and Royal Bank of Scotland shot up 1.8%. The worry here surrounds global bank HSBC, down 0.7% as a result of what experts claim is uncertainty in the euro zone concerning the sovereign debt.

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