Commodity Stocks Get Rocked
Ever since the Asian nations began to raise interest rates most leading commodity stocks and ETF's have come under severe pressure. Last night India raised their key interest rate by another 25 basis points in effort to curb the high inflation that the country is facing. China has been raising bank reserves and also raised interest rates by 25 basis points last month. Thailand, Vietnam, and other countries in Asia have all raised interest rates in order to fight high inflation.
Southern Copper Corp.(NYSE:SCCO) is a leading copper producer that has declined sharply ever since the inflation in Asia began to increase sharply. The stock topped out on January 1st, 2011 at $50.35 a share. Today Southern Copper stock is trading lower by $1.56 to $43.09 a share. This is a 14.0 percent decline in less than a month's time. The stock will have some daily chart support around the $42.00 level.
Cliffs Natural Resources Inc.(NYSE:CLF) is one of the leading iron ore pellet producers in the world. The stock had been holding up surprisingly well until last week when it staged a sharp reversal on January 19th, 2011. On that day the stock made a new high for the year at $91.41 a share. This morning Cliffs Natural Resources stock is trading lower by $2.54 to $80.42 a share. That is an 11.0 percent decline in just five trading sessions. Cliff Natural Resources stock will have daily chart support around the $78.00 level and more around the $76.50 area.
Other leading commodity stocks that are trading lower today are Silver Wheaton Corp.(NYSE:SLW), Freeport McMoRan Copper & Gold Inc.(NYSE:FCX), and Randgold Resources Ltd.(NASDAQ:GOLD). The catalyst for the decline in the commodity complex is due to the tighter money supply that is taking place in the Asian region. As long as Asian central banks continue to raise interest rates most commodity stocks should remain under pressure.