A measure of returns from commodities sank to its lowest since 1999 and shares in resource companies joined a global equity slump on concern that a slowing Chinese economy will exacerbate supply gluts.
The Bloomberg Commodity Index of 22 raw materials from oil to metals lost as much 2.2 percent to 85.8339 points, the lowest level since August 1999. Shares in miners and explorers from Glencore Plc to BHP Billiton Ltd. and Cnooc Ltd. tumbled while Brent crude fell below $45 a barrel for the first time since 2009.
“Sentiment is extremely negative across the commodity complex,” Mark Keenan, head of commodities research for Asia at Societe Generale SA in Singapore, said in an e-mail. “Markets are plagued by concerns of oversupply.”
Raw materials are in retreat as supplies outstrip demand amid forecasts for the slowest Chinese growth since 1990. The largest user of energy, grains and metals was much weaker than anyone expected in the first half of the year, according to Ivan Glasenberg, head of Glencore Plc, the world’s leading commodity trader.
The Bloomberg Commodity Index is a measure of returns that takes into account the loss or gain from holding futures contracts as well as the performance of the underlying commodities. A separate gauge that only reflects the change in prices is down 1.6 percent to the lowest since 2009.
“It’s being fueled by the large drop in the Chinese stock market today, which is making people nervous about the management of the Chinese economy, which has direct implications for commodities,” Ric Spooner, a chief market strategist at CMC Markets Asia Pty, said by phone from Sydney. “It’s now basically a risk-off move.”
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