SHANGHAI, Aug. 19 (SMM) – Global financial market was plagued by concerns again. After the European Central Bank said that at least one bank in the euro zone faces difficulty in attracting US dollar, which indicated a financing tension faced by the European financial system, gold prices hit a new record as demand for safe haven climbed and stock and commodity prices plunged.
Market worries towards euro zone banks rose again after US regulators said to strengthen control over European banks. As a result, European bank stock prices plummeted, which dragged down stock prices in various regions, with German Frankfurt index falling by 346 points, or 5.82% on August 18th. This was also responded by plunges of top 3 US stock indexes. The Dow Jones index was down 439.64 points or 3.68% to 10,990.58, standard & Poor’s 500 down 53.31 points or 4.46% to 1,140.65, NASDAQ Composite plunged the most 5.52% or 131.05 points to 2,380.43.
Improving market fears held gold prices firm but pushed down commodity prices significantly. COMEX gold prices for December delivery rose USD 28.20/oz to close at USD 1,823/oz, up 1.6%. NYMEX light crude prices for September delivery dropped USD 5.20/bbl to close at USD 82.38/bbl, a retreat of 5.9%. LME base metal prices closed the day with significantly declines on August 18. LME three-month copper prices fell USD 175/mt to close at USD 8,760/mt, a drop of 1.96%. LME aluminum prices closed the day with a drop of USD 58/mt, at USD 2,340/mt. LME lead prices were down USD 77/mt to close at 2,298/mt. LME zinc prices fell USD 49/mt to close at USD 2,164/mt.
According to recent economic data, economies in major countries in Europe and the US are basically in stagnation, triggering increasing fears over risks of a second economic recession. After French and German leaders failed to achieve substantive results this week, market confidence towards Euro-zone countries’ capabilities of resolving their debt crisis waned. As global economy has no signs of improving, investors seemed to have reached a consensus on the global economic slowdown, which is the fundamental reason for a slump in stocks and commodity markets. SMM believes that concerns over global economic growth and euro-zone's sovereign debt crisis will continue to affect financial markets and currency price trends. Market risk aversion sentiment will improve, which will support gold and other safe-haven assets, but weigh on other commodities.