Commodities rout continues, sinks stocks, Canadian dollar

flovestock

Michael Babad
Last updated Thursday, May. 12, 2011 7:36AM EDT

Commodities sink
The rout in commodities markets continued today, pulling down stocks and the Canadian dollar (CAD/USD-I1.04-0.005-0.50%).

How to keep emotions out of investing “Markets are worried about the outlook for global growth,” said Scotia Capital currency strategist Camilla Sutton.

Coupled with the downdraft in commodities, the loonie dipped. The commodities drop then picked up some speed after China boosted reserve requirements on the country's banks again. The drop in oil was pushed along by a new forecast by the International Energy Agency, which trimmed its outlook for fuel demand by 0.2 per cent.

Prices for commodities such as oil (CL-FT95.89-2.32-2.36%), gold (GC-FT1,480.20-21.20-1.41%), silver (SI-FT32.39-3.13-8.81%) and copper (HG-FT387.40-3.95-1.01%) slipped.

Global stock markets also slipped. Tokyo’s benchmark Nikkei fell 1.5 per cent, and Hong Kong’s Hang Seng 0.9 per cent. In Europe, London’s FTSE 100, Germany’s DAX and the Paris CAC 40 were down by between 0.9 per cent and 1.1 per cent by about 6 a.m. ET. Dow Jones industrial average and S&P 500 were also lower.

“Having stabilized through the Asian session, commodities, and with them commodity currencies, are weaker again in Europe,” said Adam Cole, global chief of foreign exchange strategy at Royal Bank of Canada.

“Crude is down another US$1 at US$97.20 a barrel and most other hard and soft commodities are following,” he added ... Equities are weaker across the board, with energy and basic materials leading the way. Once again, it is difficult to identify an immediate catalyst for the fall in commodity prices or risk appetite more generally, but as usual [U.S. dollar] and [Japanese yen] are the main beneficiaries.”