Bloomberg's Commodity Index has plunged to a shocking new level: It's at its lowest in 12 years, driven by plunging oil prices and the rapid decline in copper prices yesterday.
24 commodities make up the index, including oil and gas, metals and agricultural commodities. There's a full list here.
The index is down nearly 28% since its 2014 peak in May, and 43% since its 2011 peak. Last time commodity prices were this low, Westlife's Unbreakable was number one in the
Bloomberg, Business Insider
Currencies of big commodity producers like Australia have been squeezed by the drop. The Australian dollar is down by about a tenth against the US dollar since the start of 2014.
The fall in oil is helping to drive other commodities lower. Analysts at Morgan Stanley said overnight that "speculation that cheaper energy costs will encourage mining companies to increase production" was part of the reason for the drop.
Bloomberg's own piece about the drop has some worrying quotes from analysts on what the plunge means for markets:
"Oversupply and falling demand are dragging down commodities beyond oil," said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank Ltd. in Tokyo, which oversees $325 billion. "There are a lot of uncertainties and it's hard to see a reversal in sentiment for the time being. As an investor it's hard to proactively take on risk at the moment"...
"The news everywhere is doom and gloom," said David Lennox, a resource analyst at Fat Prophets in Sydney. "Prices are going to keep sinking."