Global commodity markets see sharp decline last week over economic stagnation in China
(MENAFN) Global commodity markets experienced a sharp decline last week, primarily driven by economic stagnation in China’s manufacturing and construction sectors, as well as uncertainty about the US Federal Reserve's future interest rate policies. This uncertainty has cast a shadow over global markets, with investors remaining cautious about potential rate cuts. The overall slowdown in key economic regions contributed to heightened volatility in the commodity sector, particularly in precious and industrial metals.
Economic indicators from major regions reflected sluggish growth, further exacerbating the downturn in commodity prices. In the eurozone, gross domestic product (GDP) grew by just 0.2 percent in the second half of the year, down from 0.3 percent in the previous period. This deceleration played a significant role in the declining prices of precious metals. Gold fell by 0.2 percent, silver dropped 3.2 percent, platinum saw a 0.6 percent decrease, and palladium suffered the largest drop, plummeting 5.5 percent.
The weak economic conditions in key industrial hubs like the US, Germany, and China also led to lower demand for base metals. Copper prices declined by 3.7 percent, while nickel dropped 5.1 percent, lead 3.9 percent, zinc 6.6 percent, and aluminum 4.3 percent. This widespread drop in base metal prices highlights the impact of the global economic slowdown on industrial production, as demand from manufacturing sectors continues to weaken.
Oil markets were also hit hard, with Brent crude prices falling by 7.2 percent last week. Concerns over a potential recession, along with supply disruptions in Libya, contributed to the sharp decline. On August 26, the Libyan government declared a "force majeure" on its oil fields, ports, and institutions, halting production and exports due to internal disputes over central bank control. Although UN-mediated negotiations helped to ease fears of an extended supply disruption, the oil market still faced downward pressure, driven by broader global economic concerns.
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