Industrial metals plunged and gold rallied as the emergence of a fast-spreading and highly mutated SARS-CoV-2 strain sparked a sell-off across financial markets.
Base metals, including copper and aluminum, fell more than 3 percent in London as investors weighed the risk that the new variant identified in South Africa might spur fresh outbreaks and derail growth in the world’s leading industrial economies.
Scientists say it carries a high number of mutations that could make it more effective at evading existing vaccines.
The new strain creates fresh risks to the outlook for metals demand, imperiling a recent rebound in prices driven by chronic supply constraints that have led to sharp drawdowns in global inventories.
Gold pared recent losses as investors across financial markets questioned whether new outbreaks could complicate central banks’ efforts to withdraw ultra-loose monetary policies.
On Friday, traders rushed to cut back their bets on rate hikes, while safe-haven currencies rallied.
“Metals prices had been picking up on the back of the focus on fundamental physical tightness,” Amalgamated Metal Trading head of research Tom Mulqueen said by telephone. “Now this new virus variant has emerged and the market is in a flight to safety.”
Copper fell as much as 3.5 percent to US$9,459 a ton and traded at US$9,467.50 on the London Metal Exchange, as all base metals traded lower.
Spot gold rose 1.2 percent to US$1,809.55 an ounce, while silver traded little changed, and platinum and palladium declined.
Gold for December delivery on Friday rose US$1.20 to US$1,785.50 an ounce, down 3.6 percent weekly.
“Uncertainty about the possible consequences of the new virus variant clearly reminds the markets that this pandemic is not over yet,” Alexander Zumpfe, a senior trader at refiner Heraeus Metals Germany GmbH & Co, said in a note. “The gold price should remain supported in this environment and the topic of tapering should take a back seat for the time being.”
Iron ore futures also plunged more than 6 percent in Singapore, paring a weekly gain as caution crept back into the market.
Aside from the risk posed by the new variant, there are other, ongoing ones in China’s property sector, while local governments have struggled to find good projects to spend their money on.
Additional reporting by AP
DISMAL OUTLOOK: A Citigroup analyst predicted firms face ‘the worst semiconductor downturn in at least a decade,’ due to inventory build and the potential of a recession Semiconductor stocks tumbled after Micron Technology Inc became the latest chipmaker to warn about slowing demand, triggering concern that the industry is heading into a painful downturn. In the US on Tuesday, the Philadelphia semiconductor index sank 4.6 percent, with all 30 members in the red, its biggest drop in about two months. In Asia, chip stocks from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to Samsung Electronics Co, SK Hynix Inc and Tokyo Electron Ltd slumped. Investors are growing increasingly skittish as the notoriously cyclical industry is hurtling toward a prolonged slump after years of widespread shortages that led to heavy
With a tantalizing array of satay chicken, wok-fried mud crab and chilled tiger prawns, the dinner buffet at Singapore’s Grand Hyatt hotel typically sets diners back about US$70. Those on a tighter budget and with an eye on sustainability can fill a box for one-tenth of that price. Across Asia, tech start-ups are taking food otherwise destined for landfill and providing discounted meals through mobile phone apps. About one-third of food is lost or wasted every year globally, and the mountains of waste are estimated to cause 8 to 10 percent of greenhouse gas emissions such as methane, the UN says.
MAJOR REVENUE CONTRIBUTOR: The company said that it expects revenue this year to increase annually due to an improved smart consumer electronics outlook Hon Hai Precision Industry Co (鴻海精密) yesterday said revenue this quarter would be flat from last quarter, despite new phone models launched by key customers, as the market faces weakening demand. The iPhone assembler, based in New Taipei City’s Tucheng District (土城), said it is cautious about its business outlook, given mounting uncertainty regarding geopolitical tensions, soaring inflation and COVID-19 flare-ups, but still expects revenue this quarter to be higher than the NT$1.4 trillion (US$46.67 billion) it reported a year earlier. The forecast came as the company posted record second-quarter net profit of NT$33.29 billion, up 12 percent year-on-year from NT$29.78 billion.
Yageo Corp (國巨) yesterday said that its revenue would drop by a low single-digit percentage this quarter from a historical high last quarter, as customers and distributors are holding back demand to concentrate on inventory digestion due to flagging smartphone and notebook computer demand. The world’s biggest supplier of passive components expects to take three to six months to reduce its inventory of commoditized passive components to a normal level of 100 to 110 days, from 130 days currently. Yageo would reduce its factory utilization rate for standard passive components to about 60 percent this quarter, from about 70 percent last quarter,
RSS