Oil drove commodities lower, with West Texas Intermediate crude plunging to a five-year low as gold and silver sank with industrial metals. Asian stocks fell with U.S. index futures as a gauge of Chinese manufacturing dropped more than expected, while the dollar strengthened.

WTI lost 2.1 percent to $64.75 a barrel by 10:07 a.m. in Tokyo, headed for its lowest close since July 2009. Gold sank as much as 2.1 percent as silver retreated to a five-year low, while copper and nickel lost at least 1.2 percent. The MSCI Asia Pacific Index (MXAP) fell 0.3 percent, fueled by declines among Australian and South Korean stocks as Japanese shares rose. Standard & Poor’s 500 Index futures dropped 0.2 percent. The Bloomberg Dollar Spot Index added 0.2 percent as the greenback reached a four-year high versus the Australian dollar.

Collapsing oil prices have driven the Bloomberg Commodity Index to its lowest level since 2009, damping the outlook for global price growth amid concerns over slowing economies. Swiss voters yesterday rejected a measure that would have forced their central bank hold at least 20 percent of its balance sheet in gold. China’s official factory index fell to 50.3 for November, below the 50.5 reading projected by economists with similar data for Japan, the euro region and the U.S. also due today.

“Concerns about disinflation and deflation are being fueled by what we’re seeing in energy and commodity markets at this point in time,” Richard Gibbs, global head of economics at Macquarie Group Ltd., Australia’s largest investment bank, said in a Bloomberg TV interview in Sydney. “Clearly the decision by the Saudis to not even countenance a cut in production has strong geopolitical undertones.”

Saudi Arabia, the biggest oil exporter among the Organization of Petroleum Exporting Countries, was a driving force behind the 12-member group’s decision last week to maintain its collective production ceiling at 30 million barrels a day. The oil minister of Iran, which advocated for an output cut, said in an interview late last week that the “shock therapy” of a steep decline in prices is no solution to OPEC’s loss of market share to U.S. shale producers.

 

Source : Bloomberg