Commodity markets were hit this week in the run-up to Christmas, as hopes faded for a deal to avert the US’ “fiscal cliff” of tax rises and spending cuts that could send the world’s biggest economy spinning into recession, analysts said.
Unless the political deadlock in Washington is broken, the fiscal cliff measures will be implemented in the US — a major consumer of many raw materials — on Jan. 1.
“We think Thursday’s broad-based sell-off in commodity markets is a sign of things to come,” Capital Economics analyst John Higgins said.
“Three factors seem to have been responsible for Thursday’s sell-off; First, reports that negotiations over the US fiscal cliff have stalled. Second, an upward revision to Q3 US GDP growth, which may have altered perceptions of the likely duration of the [US] Federal Reserve’s quantitative easing. And third, good old-fashioned position-squaring ahead of the holidays,” Higgins added.
Commodity markets had won support last week after the US central bank launched more stimulus measures. However, data on Thursday showed that the US economy grew 3.1 percent in the third quarter, faster than previously estimated, dampening hopes of more stimulus.
OIL: Prices diverged this week, but saw steep losses on Friday as sentiment was rocked by intensifying concerns in top crude consumer the US.
Prices had rallied on Tuesday amid indications Washington was inching closer to resolving the budget impasse after US President Barack Obama met with US House of Representatives Speaker John Boehner in the latest effort to broker an agreement.
The market also rose on Wednesday following news of a decline in US petroleum inventories, which indicated strong demand.
Crude futures paused on Thursday, but dived by more than US$1 on Friday amid the political stalemate in Washington.
By Friday on the New York Mercantile Exchange, West Texas Intermediate (WTI), or light sweet crude, for delivery in February rose to US$88.40 per barrel from US$86.51 a week earlier for next month’s contract.
On London’s Intercontinental Exchange, Brent North Sea crude for February dipped to US$108.88 a barrel from US$109.00 last week for next month’s contract.
PRECIOUS METALS: Gold struck its lowest level since August, hit also by profit-taking ahead of the year’s end, dragging other precious metals lower.
By late Friday on the London Bullion Market, gold slid to US$1,651.50 an ounce from US$1,696.25 a week earlier.
Silver dropped to US$29.89 an ounce from US$32.52.
On the London Platinum and Palladium Market, platinum declined to US$1,533 an ounce from US$1,613.
Palladium fell to US$675 an ounce from US$700.
COCOA: Prices registered more multi-month lows as sentiment was weighed down by rising supplies.
By Friday on LIFFE, London’s futures exchange, cocoa for delivery in March dropped to ￡1,471 a tonne from ￡1,543 a week earlier.
On New York’s NYBOT-ICE exchange, cocoa for March decreased to US$2,325 a tonne from US$2,432 a week earlier.
POWERING UP: PSUs for AI servers made up about 50% of Delta’s total server PSU revenue during the first three quarters of last year, the company said Power supply and electronic components maker Delta Electronics Inc (台達電) reported record-high revenue of NT$161.61 billion (US$5.11 billion) for last quarter and said it remains positive about this quarter. Last quarter’s figure was up 7.6 percent from the previous quarter and 41.51 percent higher than a year earlier, and largely in line with Yuanta Securities Investment Consulting Co’s (元大投顧) forecast of NT$160 billion. Delta’s annual revenue last year rose 31.76 percent year-on-year to NT$554.89 billion, also a record high for the company. Its strong performance reflected continued demand for high-performance power solutions and advanced liquid-cooling products used in artificial intelligence (AI) data centers,
SIZE MATTERS: TSMC started phasing out 8-inch wafer production last year, while Samsung is more aggressively retiring 8-inch capacity, TrendForce said Chipmakers are expected to raise prices of 8-inch wafers by up to 20 percent this year on concern over supply constraints as major contract chipmakers Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and Samsung Electronics Co gradually retire less advanced wafer capacity, TrendForce Corp (集邦科技) said yesterday. It is the first significant across-the-board price hike since a global semiconductor correction in 2023, the Taipei-based market researcher said in a report. Global 8-inch wafer capacity slid 0.3 percent year-on-year last year, although 8-inch wafer prices still hovered at relatively stable levels throughout the year, TrendForce said. The downward trend is expected to continue this year,
Vincent Wei led fellow Singaporean farmers around an empty Malaysian plot, laying out plans for a greenhouse and rows of leafy vegetables. What he pitched was not just space for crops, but a lifeline for growers struggling to make ends meet in a city-state with high prices and little vacant land. The future agriculture hub is part of a joint special economic zone launched last year by the two neighbors, expected to cost US$123 million and produce 10,000 tonnes of fresh produce annually. It is attracting Singaporean farmers with promises of cheaper land, labor and energy just over the border.
A proposed billionaires’ tax in California has ignited a political uproar in Silicon Valley, with tech titans threatening to leave the state while California Governor Gavin Newsom of the Democratic Party maneuvers to defeat a levy that he fears would lead to an exodus of wealth. A technology mecca, California has more billionaires than any other US state — a few hundred, by some estimates. About half its personal income tax revenue, a financial backbone in the nearly US$350 billion budget, comes from the top 1 percent of earners. A large healthcare union is attempting to place a proposal before
RSS