Investor optimism index crashes on housing woes, energy prices
Impact on commodity prices yet to be seen
By Dave Hannon -- Purchasing, 8/28/2007 2:24:00 PM
Investors are not happy lately and their discontent could have a dramatic impact on commodity prices going forward. If investors pull out of commodity markets, it could mean less volatility, which would provide a welcome relief from the roller coaster ride most buyers have been on for the past two years.
The most recent reading of the UBS/Gallup Index of Investor Optimism showed that investor optimism plunged 14 points to a level of 73. And the Economic Dimension of the Index, which measures investors’ feelings about the direction of the overall U.S. economy, dropped 11 points to 5 for the month of August, marking the lowest level of optimism about the economy since August 2006, when it stood at -1.
UBS analysts credited three main factors for the loss of confidence among investors: fallout from the subprime mortgage credit crunch, a continually slowing housing market and ongoing concern about energy prices.
While energy prices still top the list of investor concerns, the level of anxiety has decreased slightly. In August, 64% of investors say they believe energy prices are hurting the current investment climate “a lot,” down from 70% who held this view in July.
WHAT DO YOU THINK?
Take a minute and answer the online poll question posted on the Purchasing.com home page that reads:
The current credit crunch is discouraging speculators from investing in commodities futures. Will this continue to lower the prices of the metals you buy?
Results will be shared on Purchasing.com and in an upcoming report in Purchasing magazine.
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