Tim Seymour: A rising dollar and diminished expectations of global economic growth are driving traders from commodities, commodity stocks and economies that depend on export today.
Oil is down 5.71% in late New York trading and copper — a key gauge of global industrial production — is down 4.6%, while other industrial metals are facing similar losses.
Despite falling to record lows against the yen and the Swiss franc, the dollar ended up 0.14% against the DXY dollar index, a basket of currencies.
Nearly all “soft” commodities are under substantial pressure as traders liquidate relatively speculative positions to crowd back into the relative safety of the Treasury market, gold and cash itself.
Take a look at broad commodity fund in the PowerShares DB Commodity Index Tracking ETF (NYSE:DBC):
Among the BRIC group of emerging markets, Brazil and Russia are the most obviously linked to commodity prices. As reflected in the performance of the iShares MSCI Brazil Index ETF (NYSE:EWZ), the Brazilian Bovespa is down 9.67%:
Petrobras (NYSE:PBR) and iron miner Vale (NYSE:VALE), the two biggest stocks in Latin America — accounting for 35% of the Bovespa between them — are both down about 10%.
In oil-rich Russia, the benchmark RTS index closed down 7.8%, as you can see from recent activity in the Market Vectors Russia ETF (NYSE:RSX):
Gazprom (OGZPY), the heaviest weighted stock in Russia, is now down 12.7% in New York trading. Oil producer Lukoil (LUKOY), nickel miner Norilsk (NILSY) and integrated steel producer Mechel (NYSE:MTL) are all down over 10%.
Emerging Money provides insightful and timely information about the increasingly important world of Emerging Market investments. CNBC Emerging Markets Contributor Tim Seymour leads the team of Emerging Money to bring you cutting edge global news and analysis.
About Tim Seymour: Tim is a founder of Emerging Money. He is a founder and Managing Partner at Seygem Asset Management, and The Emerging Markets Contributor to CNBC. Seygem Asset Management focuses on investing throughout the global emerging markets asset class. With a view that emerging and developing economies will continue to outpace the economic growth and advancement of developed economies, Seymour has devoted a career to investing in the dominant markets of tomorrow, today. Seymour’s career has included significant experience in both alternative asset management (hedge funds) and capital markets, having launched two hedge funds, and built the largest Russian broker dealer in the USA. Seymour started his career at UBS, focusing on international credit (cash, swaps, forex) in a specialized hedge fund group (New York). Seymour completed the firm’s training program after graduating with an MBA in international finance from Fordham University. Seymour received his undergraduate degree at Georgetown University.