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FTSE Crushed By Commodity Sector As Dollar’s Safe-Haven Strength Causes Chaos

Published 16/08/2018, 08:00
Updated 21/10/2020, 09:15

Trading got real ugly on Wednesday afternoon, with continued volatility from the Turkish lira, another steroid injection for the dollar and the related commodity chaos causing the Western indices to completely lose their heads.

Already softened up by the ongoing US-China trade war, the dollar’s latest gains – the greenback took 0.2% off both the pound and the euro, forcing each currency to fresh one year-plus lows as investors sought a safe haven – were just too much for the commodities. Gold fell more than 1%, Brent Crude dove 1.7% and copper dropped a whopping 4%(!!!), leading the FTSE 100's index-defining oil and mining sectors to have a mid-week breakdown. This in turn left the UK index struggling for air, plunging 125 points and the wrong side of 7500.

Things were no better elsewhere. The DAX shed 200 points as the day went on, ducking under 1220, while the CAC suffered a 1.8% collapse, leaving the French index only a smidge higher than 5300 having traded above 5500 this time last week.

As for the Dow Jones, the US index couldn’t withstand the onslaught of negativity brewed during the European session, falling 280 points as the bell rang on Wall Street. The Dow is now in serious danger of dropping below 25000, something that hasn’t happed in almost 4 weeks.

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