After massive commodity producer Russia was exiled from the world economy, a new shock is emerging from China — the world's biggest user of raw materials.
The big picture: Commodities prices turned tail and tumbled yesterday, as China imposed new COVID-related lockdowns in response to soaring infection rates.
By the numbers: U.S. benchmark crude oil dropped 5.8% to $103 a barrel.
- Benchmark Chinese iron ore contracts dropped nearly 7%.
- Prices for copper, a key industrial metal, fell 2.4%.
- Even European natural gas prices — the epicenter of the Russian commodity shock — dove nearly 10%.
Threat level: If sustained, the downturn in commodities prices suggests traders see the remarkable level of global uncertainty right now — War! Inflation! COVID! R.I.P. globalization! — as potentially triggering an economic downturn.
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