Commodities prices recovered in tandem with equities on Thursday from last week’s rout but analysts said fears of economic slowdown hung over markets.
Oil was firm at mid-day on concerns about US stock levels, and had a knock-on effect to lift gold. Industrial metals copper and nickel were up, while wheat, sugar and coffee also gained.
That did not mean, however, the factors that triggered last week’s sell-off, which saw a nearly 9% drop in the Shanghai stock market, had gone away, analysts said.
“Recent market volatility has been about too much complacency and probably too much leverage. What we’ve seen to date are concerns about tightening liquidity conditions,” Andrew Cole, a director at Baring Asset Management, said.
“Growing concerns about a possible recession in the United States could spur commodity and equity markets down. I would be surprised if volatility were to end this quickly.”
Worries about monetary tightening in China to check strong economic growth were reinforced by recent rate hikes in Japan.
That kindled worries that the cheap yen, which many investors had borrowed to finance purchases of higher-yielding assets would become more costly.
US economic data is one of the main contributors to volatility, and the closely watched non-farm payroll report is released on Friday.
Nick Trevethan contributed to this story.