Commodities: Base metals hit by virus worries, US weighs sanctions on Rosneft
Base metals were the weakest chain in the link in the commodity space as investors took stock of a raft of corporate warnings about the impact of the Wuhan virus on their operations.
"The focus remained today on the emerging global supply chain impact as force majeure was announced across various sectors and global businesses started highlighting impacts on their business," said James Roberts at Sucden Financial.
Among the industrial names warning of the impact of the 2019-nCoV coronavirus were Burberry, Toyota Motor, Apple supplier Hon Hai Precision and Canada Goose.
Echoing the concern over the potential fallout from the hit to the Chinese economy, in its semi-annual Monetary Policy report to Congress, the US central bank said that the outbreak represented a new risk to the outlook.
"Because of the size of the Chinese economy, significant distress in China could spill over to U.S. and global markets through a retrenchment of risk appetite, U.S. dollar appreciation, and declines in trade and commodity prices," the Federal Reserve said.
Against that backdrop, as of 1837 GMT, the Bloomberg commodity had pared earlier losses and was drifting lower by just 0.07% to 74.91, while the US dollar spot index was edging up 0.20% to 98.69.
To take note of, citing people familiar with the matter, Bloomberg reported that Washington was weighing hitting Rosneft PJSC, Russia's biggest oil producer, with sanction in reprisal for its tied to the Venezuelan regime.
That followed Caracas's decision to intern in prison six executives of US-based refiner Citgo, which in turn is a subsidiary of Venezuela's state-owned PDVSA.
Visiting Venezuela, Russian froeign minister, Sergei Lavrov criticised US sanctions against the South American country's current government.
All the main base metals contracts on the LME fell, with three-month copper futures closing at $5,663.0 per metric tonne after starting the session at $5,743.0m, while zinc futures skidded lower from $2,210.0 per tonne to $2,145.0.
Brent crude oil futures were also lower, with the March contract falling 0.90% to $50.49 a barrel on NYMEX and similarly-dated heating oil down 0.97% at $1.6493 a gallon.
Soft commodities on the other hand were mostly higher.
March wheat on the Chicago Board of Trade was up 0.72% to $5.6025 a bushel, alongside a 1.19% advance for corn to $3.8375 a bushel.