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Commodities and crude prices crash in the panic
10 Oct 2008Banking and insurance shares, oil and commodities crashed around the world today amid fears for the global economy.
The oil price crashed more than $4 a barrel as investors bet that big energy consuming nations would be reining in their usage.
Trading in bank shares in the opening minutes in London was temporarily frozen in the rush to sell.
Shares in HBOS, Royal Bank of Scotland, Barclays and Lloyds TSB all fell between 13% and 25% as trading resumed.
On the Continent, insurance giants Allianz, Axa and Swiss Life crashed 10%, while UBS, Credit Suisse and Abbey owner Santander tumbled 6%, 9% and 7% respectively.
Oil was set to post its biggest weekly price slump since December 2004.
After initially crashing more than $4, London Brent crude later settled down $3.35 a barrel at $79.29.
New York crude tumbled $4.59 a barrel to $82 before a modest rally took it to $82.55.
Other commodities like copper, nickel, zinc and aluminium all fell heavily. Copper tumbled 9% to $4830 a metric ton on the London Metal Exchange.
“It's worrying,” said David Moore, commodity strategist at Commonwealth Bank of Sydney.
“Equity markets are falling dramatically, the credit crisis is spreading and the outlook remains poor.”
Tellingly, the only major commodity that gained was gold, which surged $14.65 an ounce to $927.90.
Investors traditionally flee into gold as a safe place to invest in times of financial and economic peril.
“The macro environment has become positive for gold once again,” said Barclays Capital's advice note to clients.
The worldwide financial crisis took its first victim in Japan today as Yamato Life Insurance collapsed owing $2.7 billion, having made big investments in hedge funds and property investment trusts.
“This is panic. New York, the currencies — there's nothing left for us to trust,” said Takashi Ushio, head of investment strategy at Marusan Securities.”
Nomura Trust and Banking foreign exchange trader Hideki Amikura said: “The news of Yamato Life was totally unexpected, sending shivers through the spine of many of us.”
