Sept quarter: Ghost of 2008 is back to torment investors

Bad, bad, bad. The quarter ended September was one of the worst for several asset classes since late 2008. Global equities plunged while emerging market currencies dived as investors sought refuge in safe havens. And that safe haven turned out to be US Treasuries, which had its best run in three years. Even gold lost some of its lustre as a safe-haven asset, as September turned into one of the shiny metal’s worst months in recent years, although it ended the quarter with respectable gains.

Here is a quick summary of how different asset classes, currencies and key commodities performed during the quarter.

Global equities: Global stocks closed their worst quarter in nearly three years on nagging concerns about the world economy and the absence of a credible solution to Europe’s debt crisis. The MSCI All Country World Index slumped 18 percent for the quarter and lost roughly $5.29 trillion in market capitalisation, according to Thomson Reuters Datastream. India’s Sensex also shed 13 percent by the end of the quarter, the most since the three months ended December 2008.

**US Treasuries:**This asset turned into the most sought-after safe haven during the quarter. Longer-dated US Treasuries soared to their best-performing quarter since late 2008. The 30-year US government bond led the marketrally as its yield tumbled 1.48 percentage points - thesteepest drop since a 1.63-percentage-point decline during theheight of the worldwide credit crunch in the last quarter of2008. During the three months, the yield on the 30-year bond hit 2.739 percent, its lowest levelsince January 2009, while the yield on the benchmark 10-year Treasury notes touched 1.674 percent - the lowest level seen in at least 60 years.

**Asian currencies:**Asian currencies had their biggest monthly loss in more than a decade as risk-averse investors dived under the safety of the US dollar. The New Taiwan dollar dropped the most since October 1997 and South Korea’s won completed its worst month since February 2009, as overseas funds pulled a combined $3.9 billion from their stock markets. The Thai baht depreciated 3.7 percent to 31.10, its worst performance since March 2001. The Indian rupee posted its biggest quarterly decline in three years, tumbling close to 49 against the greenback. The partially convertible rupee has lost 8.8 percent against the dollar during the September quarter, its largest quarterly fall since the same period in 2008, Thomson Reuters data showed.

Euro: The euro had its worst quarter against the dollar and the yen in more than a year. The 17-nation currency slumped about 7.5 percent against the dollar. The euro also posted its biggest monthly drop in nearly a year - $1.3384 - before recovering slightly.In September alone, the euro lost 6.6 percent, its weakest performance since November 2010. A boost to the euro after Germany’s Parliament approved new powers for the euro zone bailout fund proved fleeting after data showed a slump in German retail sales in August.

**Gold:**The precious metal posted a quarterly gain of 8 percent - its biggest this year, despite a drop of 11 percent for September - its largest monthly decline in three years. After hitting a record $1,920 per troy ounce in early September, prices have retraced to around $1,620 per troy ounce. In fact, in the past two weeks, gold experienced one of its steepest corrections in history, partly weighed down by a sharp margin increase.

Silver: Prices were extremely volatile in September and ended the month 27 percent lower at $30 an ounce. Overall for the quarter, the precious metal ended 13 percent lower. Silver has a broad range of industrial end-uses, including electronics equipment and solar panels. It is, therefore, more sensitive to signs of economic weakness. It is also a less liquid market than gold, meaning it takes a smaller amount of market activity to move prices.

Oil: Oil capped the largest quarterly drop since the 2008 financial crisis by tumbling to a 1-year low as signs of slowing growth in China, the US and Germany amid growing fears that energy demand will weaken. Crude oil for November delivery fell to $79.20 a barrel on the New York Mercantile Exchange, the lowest settlement since 29 September, 2010. Brent oil for November settlement, meanwhile, settled at $102.76 a barrel on the ICE Futures Europe exchange in London. Prices are down 8.6 percent this quarter and 11 percent this month.

**Copper:**The economically-sensitive metal lost more than a quarter of its value in July-September on its way to the cheapest price in 14 months at $6,800 per tonne, as concerns about European debt contagion, high US unemployment and signs of slowing growth in China dented global demand prospects. It was the biggest quarterly loss since the fourth quarter of 2008, when copper prices crumbled more than 50 percent as the financial crisis took its toll on the economy.

(With inputs from Agencies)