FTSE Crashes: Commodity rises but miners fall

Slow growth in commodities markets.

Slow growth in commodities markets.

Miners suffered heavily from the sell-off on Thursday as the FTSE 100 plunged over debt and growth fears. Shares in Europe and the US have suffered consecutive days of falls over continued forecasts about a slowdown in the global economy.

Miners feel the brunt of market crash

Swiss miner Xstrata saw the greatest fall of all the blue-chip miners falling 10.2% while commodities trader Glencore was 10% lower and copper miner Kazakhmys fell 8.2%. One miner who managed to resist dramatic falls was Randgold Resources, falling just 0.4% benefiting from fearful investors buying Gold stocks as a hedge against the market turmoil. Randgold Resources saw its primary commodity reach a new high of the year at $1,826.91 an ounce.

Brent crude slips as dollar firms

Brent crude futures were down almost 3% at $107.29 a barrel as on-going concerns over Europe’s debt crisis and a firmer dollar drew investments away from oil assets, bringing oil giants Royal Dutch Shell and BP down by 3.2% and 3.1% respectively. Oil has been under pressure this week after plans from France and Germany to move toward fiscal union in 2012 failed to reassure investors, hitting growth and demand for oil.

Prices were also depressed by a stronger dollar, which rose as high as 0.35% against a basket of currencies on Thursday, making dollar-denominated assets more expensive when purchased in other currencies.

Gold’s bull-run gains momentum as currencies weaken

While gold has hit a series of record highs over the past two months as the precious metal’s value, unlike that of a currency, hasn’t depended on the health of a single country’s economy. Its swift rise has made it popular with investors seeking big returns, as well as presumed safety from turbulent financial markets. At midday, the most-traded futures contract, was worth $1,820.50 an ounce, up $26.70.

Low interest in the US and the Eurozone turmoil is expected to keep pushing precious metals higher with the gold rally encouraging silver prices to rise. However, the poor economic outlook has weighed on demand prospects of the metal, which is resulting to wide industrial implications.

There was very little to be positive about in a market where everything was being sold. Only six stocks among the UK’s top 350 companies gained ground.


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