Commodity markets signaled a modest, initial return to risk after a dramatic weekend of intervention by the authorities that saw UBS Group agree to buy Credit Suisse Group and central banks boost dollar liquidity.
Crude oil edged higher after collapsing by 12% last week, while copper futures also gained. Gold — which had benefited from the turmoil with a rally toward $2 000 an ounce — dropped as much as 0.7% as the week’s trading kicked off.
After hitting a record last year following Russia’s invasion of Ukraine, the Bloomberg Commodities Spot Index has lost more than a quarter of its value as concerns over a global slowdown, higher interest rates, and a huge selloff in natural gas dragged the gauge lower. The upheaval in the banking sector — marked by the swift collapse of several US lenders and subsequent crisis at Credit Suisse — then deepened the rout, although bullion was a beneficiary.
At the weekend, with a crisis of confidence threatening to spread across financial markets, the Swiss government brokered the deal for Credit Suisse, including a guarantee for potential losses from the assets UBS is taking over. In addition, the Federal Reserve and five other central banks announced coordinated action to boost liquidity in US dollar swap arrangements.
The slump in commodities has come despite China’s rapid reemergence after officials ditched the Covid Zero policy that had acted as a brake on consumption. Last week, Beijing cut the amount of cash banks must keep in reserve at the central bank to support lending and strengthen the recovery.