Another wave of economic tsunami about to strike the world

Raw materials continue to lose their value on world markets. According to Standard & Poor's GSCI Spot index, the quotations hit the minimum level in nine months on October 3. The reduction of the prices occurs due to expectations of the economic decline, as well as owing to the decline of demand on primary goods. The growth of the Russian economy has slowed down as well.

Standard & Poor's GSCI Spot, which includes the dynamics of prices on 24 kinds of raw materials, dropped by 5.38 points (0.9%) on October 3 - to 585.62 points, Bloomberg reported. During the third quarter of this year, the index has dropped by 12%. This is the largest reduction since the last three months of 2008.

Investors turn their backs to commodity assets. The volume of commodity market dropped by $1.08 billion over one week ending September 28. Protective assets remain the same - gold and silver. These metals have been growing again recently. Gold lost 11% of its value in September, but it only means that the precious metal has been inflating its credentials. Investors use gold and silver as a tool for market hedge.

On Tuesday, the spot price on gold increased by 0.9% to $1,672.38 per troy ounce. Gold has been gaining value for a fourth session in a row. Silver gained 2.5% - $31.1737 a troy ounce.

"People are worried about a global slowdown and a double dip," Donald Selkin, the chief market strategist at National Securities Corp. in New York said.

Copper quotations dropped by 4% - to $6,712 per ton. December futures on Arabica coffee lost 4% on October 4 - to $2,198 a pound. This is the lowest price since December 2010.

Taking into consideration the significance of commodity prices for the Russian economy, the state of affairs on world markets raises certain concerns.

The business activity index (IDA), calculated by the Russian Managers Association has increased by only 2% since the beginning of the year. The index has been showing negative dynamics during the recent two months.

The PMI index, calculated by HSBC on the basis of Markit's data, also testifies to stagnation in Russian processing branches. The results, which the index showed in August, became the worse since 2009. The PMI index reflects the data about new orders, production outputs, employment, delivery terms, materials and their reserves. As a result, the index revealed no improvement of business conjuncture of the sector in September and neared the critical level of 50.0 points after 49.9 in August.

November futures on WTI oil became $1.59 (2.01%) cheaper on Monday and hit the level of $77.61 per barrel. This is the lowest index since September 29, 2010.

However, the WTI brand loses its role of an important indicator for the whole market. Brent was traded at over $100 per barrel, which is much more expensive than WTI. Brent remains the basic benchmark for Russia's Urals oil, and the situation does not look critical form this point of view.

The prices on black gold come late in reaction to the problems in the world economy. This happened in 2008. In other words, it is impossible to use oil quotations for forecasts. In Russia, though, they build three-year budgets on the forecasts of oil prices to create the illusion of financial stability.

Vitaly Salnik.

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Author`s name Dmitry Sudakov