The Baltic Dry Index (BDI) tracks the cost of shipping bulk commodities and is thus deemed a leading indicator for the world economy and markets. But while it led the global equities slide of September 2008 and the rebound of March 2009 by around three months, its 55% drop since June may not mean equities are due for a fall, says Breakingviews.com's Constantine Courcoulas. The recent picture has been skewed by China's stockpiling of commodities and conditions in the shipping industry.
Part of the surge since March has been due to a Chinese spending binge on raw materials, which is now ending. A sub-index tracking the cost of hiring capesizes, the largest of the bulk cargo ships that carry iron ore and coal, has plummeted, but three other sub-indices have climbed since June, says Capital Economics: the key issue is reduced stockpiling in China.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Inheritance tax investigations catch out 1200 more families in HMRC crackdownWhere there is a suspicion inheritance tax has been underpaid, HMRC has extensive powers to check the deceased individual’s financial affairs and chase what is owed. Will you pay more?
-
Bank of England expected to cut interest rates despite sticky inflationEconomists and industry experts think that a weakening economy will force the MPC to stick to its cutting schedule in spite of inflation running above its target.
