Investors cut wagers on a rally for commodities to the lowest in almost four years and pulled a record $4.23 billion from funds last week, as prices erased this year’s gain on a slowdown for manufacturing in China.
Money managers removed a record $4.23 billion from commodity funds in the week ended February 27, including $4.03 billion from gold and precious-metals funds, said Cameron Brandt, director of research for Cambridge, Massachusetts-based researcher EPFR Global, which tracks money flows. That’s the highest of data going back to 2000.
Bloomberg report shows that hedge funds and other large speculators reduced net-long positions across 18 US futures and options in the week ended February 26, by 16 percent to 447,106 contracts. Investors are betting on a decline in copper prices for the first time since November, and reduced their crude-oil holdings by the most in 11 weeks.
“Commodity markets are worried about China and are sensing possible trouble in the macro picture,” said Stanley Crouch, who helps oversee $2 billion of assets as chief investment officer at New York-based Aegis Capital Corp. “Commodities may be out in front of a possible slowdown. The sentiment is changing to cautious.”
The Standard & Poor’s GSCI Spot gauge of 24 commodities is down 0.8 percent this year. The MSCI All-Country World Index of equities climbed 3.8 percent, while the dollar rose 3.1 percent against a basket of six trading partners. Treasuries lost 0.2 percent, a Bank of America Corp. index shows.
Manufacturing in China, the top consumer of cotton, copper and soybeans, expanded at the weakest pace in five months in February, the government said March 1. In Europe, which accounts for 18 percent of global copper use and 14 percent for energy, unemployment climbed to a record in January.