A new wave of selloff in risky assets emerges again after stabilization for 1-2 days. While the market worries about slowdown in European growth as many countries step up their fiscal consolidation plans, corporate earnings and macroeconomic data fail to ignite hopes.
Decline in WTI crude oil accelerates in European session with the benchmark contract sliding for a 4th consecutive day to a 3-month low at 72.72. On weekly basis, WTI crude should fall around -3%, after slumping -12.8% in the prior week.
Gold resumes recent rally after yesterday's pullback as concerns over sovereign crisis and resultant slowdown in global economic growth spurs demand for safe-haven assets. Currently trading at 1249.7, the benchmark contract has made a new record high. At this point, risk of profit-taking is high and scrap supply will likely emerge to drag down price.
PGMs fall for a second day. While the market talks about impacts of escalated sovereign crisis on Eurozone's economy, it raises concerns about auto demand. Analysts had anticipated European car sales to be flat from the previous year as the government's cash-for-clunker scheme ends. However, such forecast may need to be revised down as economy in Europe may weaken. Should slowdown in auto demand have impacts on PGM consumption, platinum should be hit harder than palladium as European auto market is dominated by diesel-fuelled vehicles.
Base metals also plunge, paring gains of 1-3% on Thursday, amid growth concerns. However, new Chinese policy may boost light-weight metals in the future. The National Development and Reform Commission, the government ends discounted power rates to higher-usage companies with immediate effect. Moreover, it will impose financial penalties on companies whose power consumption is higher than limits set by the state. Aluminum smelters will be greatly affected given the heavy power consumption. The policy may force some small smelters to shut down, hence tightening supply.
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