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Journalism of Courage
Disappointing policymakers who were waiting for a dip in commodity markets to stop the monetary tightening,crude oil and copper led a rebound in commodities from an eight-month low after the US Federal Reserve pledged to keep its benchmark interest rate at a record low for a further two years to bolster the economy.
The Samp;P GSCI Spot Index of 24 commodities surged as much as 2.5 per cent to 629.64,the most since July 7. The index fell to 598.46 on Tuesday,the lowest level since December 2. Oil jumped as much as 4 per cent after falling to a 10-month low on Tuesday and copper gained as much as 3.1 per cent,the first rise in 6 days.
Crude oil prices will remain weak. Prices had fallen by 20 earlier this week. This level of decline would have reduced Indias oil import bill by 18 billion. Copper is expected to remain firm while aluminium will depend on the supply levels, said Jayant Manglik,president,Religare Commodities. Anand James,chief analyst,Geojit Comtrade,said,Markets were seen recovering from the turmoil after the Fed assurance,though markets still remained wary of slowing economic growth. As the risk appetite improved,stocks,base metals and crude oil were seen recovering after the recent panic sell off.
Copper for delivery in three months gained 3.1 per cent to 9,005 per metric tonne,the biggest increase since June 14. Nickel climbed as much as 4 per cent to 22,050 a tonne,most since April 20. Analysts said commodities are tracking equities with commodities fundamentals,both in supply and demand,are stronger than equities anyway,creating propensity to buy on dips. Commodities also gained as China,the top buyer of copper and aluminium,may join Asian nations from South Korea to India in delaying interest-rate increases.
Copper continued to show some positive momentum on Wednesday supported by the Fed decision. Added support came from the positive trade numbers from China for the month of July, said Basant Vaid,senior research analyst,Bonanza Portfolio.
