Unemployment in the 17-nation euro area rose to 11.9% in January, the highest since the data series started in 1995, figures from the European Union’s statistics office showed. Brent crude oil, the U.K. benchmark, tumbled to a seven- week low on March 1, and an index tracking six London Metal Exchange commodities including copper and aluminum dropped 4.8% in February, the most since October.
The International Monetary Fund said it will lower its growth forecast for the U.S. this year because of $85 billion in spending cuts that were set to begin last week. The U.S. is the top user of crude oil and the second-biggest metals consumer.
Raw materials from cocoa and hogs to zinc and crude oil are slumping in 2013 after a four-year commodity rally led to records prices for everything from copper and gold to cattle and corn. Investors boosted purchases as central banks cut interest rates and began asset purchases to revive growth after the after the 2008 financial crisis, and crop-damaging droughts cut grain output.
Commodity assets under management reached a record $451 billion in April, compared with $154 billion at the end of 2008, and the investments have been above $400 billion for seven straight months, and totaled $430 billion in January, according to Barclays Plc.
Precious metals got a boost from concern that record-low interest rates and surging government debt in the U.S. and Europe would spur inflation. Gold held by exchange-traded funds reached a record 2,632.5 metric tons on Dec. 20. Since then, holdings have plunged 4.9%, and the drop in February was the biggest since April 2008. Open interest in commodities is down 2.5% since reaching the highest since at least 2006 on Feb. 19.
Stimulus policies from central banks and an improving economic outlook in the U.S. will help buoy commodities, said James Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management, which oversees about $325 billion of assets.