Doubts about Europe’s economic and political future weighed on investor confidence causing a flight to government bonds.
In addition to the European malaise, economic figures indicated a sharp contraction of private sector output and declining demand in various global economies, including lower growth rates in China.
Crude oil dropped by more than 15% due to this weaker economic data, easing tensions with Iran and lowering geopolitical risk premiums. Against this trend, wheat temporarily showed an increase of nearly 20% as a result of dry weather in the US and Russia but fell back at month-end to finish unchanged.
Gold continued its downward trend which started in March, now resting around the support level of $1,530 per ounce.
HSBC estimates that industrial production in China shrank for the seventh consecutive month. As a result, Chinese warehouse inventories of industrial metals are high whilst prices are trading some 30% below the highs seen last year. Copper, often taken as leading indicator for the world economic prospects, fell below $8,000/t. Warehouses in Shanghai were said to hold high stocks and copper is being re-exported, to profit from higher prices in London. Chinese authorities are expected to put forward a new stimulus package and to continue to ease monetary policies to boost growth.
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