- Copper, a bellwether for growth, drops as much as 4% in London
- Brexit vote also hurting shares of industrial metal producers
Copper declined along with a drop in shares of companies that mine the metal after a shock U.K. vote to leave the European Union saw investors exit assets tied to economic growth.
Copper fell as much as 4 percent, while prices of the other five main metals traded on the London Metal Exchange dropped after the “Leave” camp in the U.K. referendum on EU membership sealed its victory, roiling markets and causing panic on trading floors around the world.
Global equities plunged and havens like the dollar rose, adding to losses in commodities priced in greenbacks, now more expensive for investors with other currencies.
“Brexit shock-waves crashed into all the global financial markets. The people have spoken and so have the bears,” Michael Turek, the head of base metals at BGC Partners Inc. in New York, said in an e-mail. “It is self evident from the broad declines across all global financial markets that Brexit is seen as very disruptive to trade flows and thus prospects for economic growth.”
Copper, a bellwether for economic growth because of its use in wires and cables for construction projects, fell 1.7 percent to settle at $4,698 a metric ton ($2.13 a pound) at 5:50 p.m. on the LME. Even so, the metal posted its best weekly gain in two months after rallying amid expectations the U.K. would remain in the EU.
The Bloomberg World Mining Index tumbled 3.6 percent, headed for the biggest drop in six weeks, with gold miners gaining and industrial metals companies sliding. Glencore Plc, Freeport-McMoRan Inc. and BHP Billiton Ltd. all dropped more than 7 percent, while Randgold Resources Ltd., up 14 percent, was the biggest gainer. A gauge of 18 industrial metal producers tracked by Bloomberg Intelligence fell as much as 8.7 percent.
In other metal news:
- Copper futures for September delivery slid 2.3 percent to $2.116 a pound on the Comex in New York.