Copper weakens as hopes for trade deal fade
LONDON–The price of copper slipped Monday, giving up some of its gains from last week as doubts surfaced over the potential for a trade deal between the U.S. and China.
Copper fell 1.2% to $6,239 a metric ton in midmorning trade, along with most other industrial metals.
The price of gold, meanwhile, edged down 0.1% as the U.S. dollar inched up. The two assets tend to move in opposite directions.
The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was last up 0.1%, having eroded its five-day losses to 0.3%. A stronger dollar makes dollar-denominated commodities more expensive for holders of other currencies.
As the most widely traded base metal and a bellwether for confidence in the Chinese economy, copper has reacted with more sensitivity to investor fears regarding the global economy this year.
That has been evident in recent trading sessions, with copper being dragged up and down by moves in Chinese equities markets, which have been rocked by a combination of geopolitical considerations and fears of slowing global economic growth.
Chinese stocks and metals prices leapt Friday following President Trump’s tweet Thursday that he’d had a "very good conversation" with Chinese counterpart Xi Jinping. But those moves were damped after White House economic adviser Larry Kudlow told CNBC that the two countries weren’t on the cusp of a deal.
The Chinese yuan weakened by 0.5% against the dollar Monday, while Shanghai’s composite index and Hong Kong’s Hang Seng Index were down 0.4% and 2.1% respectively. Those moves, combined with a rise in copper prices over the past month, were behind early-week selling, said Commerzbank analysts in a note.
News within China was also adding to the pressure on Chinese assets, after President Xi used the opening of a trade fair in Shanghai to praise globalization and announce a series of proposed measures to encourage affordable imports in China.
That, "coupled with a distinct lack of details around any further stimulus measures, leaves the market disappointed," said Alastair Munro, a broker at Marex Spectron.
Adding to the downbeat mood, growth in China’s service sector slipped to a 13-month low in October, according to figures released Monday.
Investors were keeping an eye on the U.S. midterm elections to be held on Tuesday, with analysts expecting the dollar and U.S. assets to come under pressure if that the Democrats wrest control of the House of Representatives from the Republican Party.
Among precious metals, silver was up 0.07% at $14.76 a troy ounce, palladium was up 0.67% at $1,126.50 a troy ounce and platinum was up 0.13% at $869.85 a troy ounce.
Among base metals, aluminum was up 0.23% at $1,989.50 a metric ton, zinc was down 0.61% at $2,537 a metric ton, tin was down 0.31% at $19,070 a metric ton, nickel was down 1.13% at $11,805 a metric ton and lead was down 1.62% at $1,977.50 a metric ton.
Write to David Hodari at [email protected]
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