FXStreet (Mumbai) – The Bloomberg commodity index of 22 raw materials has entered the bear market due to a stronger US dollar and a slowdown in China.
Oct 2008 again..
A financial instrument is widely seen entering into a bear market after suffering at least 20% drop from the previous bull speak. Eighteen of the 22 components in the Bloomberg Commodity Index has dropped at least 20% from recent closing highs.
This is similar to the index composition seen at the end of the October 2008. Two of the index’s top three heavyweights – gold and crude oil – are in bear markets. Corn, natural gas, wheat and cattle have managed to stay resilient on the back of a weather driven supply issues.
The bearish sentiment in the commodity markets is evident from the Hedge fund activity. As per Bloomberg, money managers have slashed bets on higher commodity prices by half this year, anticipating lower oil and gold prices.
(Market News Provided by FXstreet)