“(Reuters) – A fall in copper to near four-year lows compounded increasing concern about China’s economic slowdown on Wednesday to send a wave of unease through world financialmarkets.
Global stocks fell for a fourth day and copper, often regarded as a proxy for China’s economic fortunes, hit its lowest level since 2010 after Shanghai futures had again fallen by their 5 percent daily limit.
In Europe, bourses from London to Lisbon tumbled .FTEU3 and safe-haven German government bonds were in demand as the jitters added to the effects of the tug-of-war over Crimea, which has pitted Russia against Ukraine and the West.
“Markets are watching what is happening in copper with awe and trepidation,” said Societe Generale head of currency strategy Kit Juckes. “It’s partly ongoing concern about Chinese growth (or lack thereof) and nagging worries about the Ukraine. And partly it is just that the commodity bubble burst last year and not everyone noticed.”
Copper’s fall follows China’s first domestic bond default which has raised concerns about a possible unraveling of the many loan deals which have used the metal as collateral.
The metal has been in freefall for the last three days but the worries finally appeared to be catching up with other markets. Stocks across Asia – although ironically not in China – had seen sizeable falls, while the Australian dollar, Chilean peso and South African rand, currencies highly sensitive to commodities, all buckled.
The aussie was last down 0.5 percent at $0.8935 though traders said it could have fallen much more had it not been for demand created by a big A$7 billion bond sale.
Japan’s Nikkei .N225 retreated 2.6 percent, continuing the see-saw pattern of the last couple of months, while Australian stocks shed 0.6 percent .AXJO. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 1.2 percent.
That mirrored a lackluster performance on Wall Street, where soft data left investors no wiser on whether the U.S. economy’s troubles were weather-related or something more worrisome.
Futures prices pointed to another negative start when trading resumes later with little in the way of U.S. data to drag attention away from China and copper.
CHINA CHILL…”
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