Copper Drops in Muted Reaction to Stock Market Rout

Date : 10/11/2018 @ 5:58AM
Source : Dow Jones News

Copper Drops in Muted Reaction to Stock Market Rout

By David Hodari 

LONDON--Base metals prices gently fell on Thursday, in a muted reaction to sharp selloffs in global stock markets.

The price of copper was down 1.1% at $6,150.50 a metric ton in midmorning trade.

Gold, meanwhile, rose 0.7% to $1,201.20 a troy ounce, benefiting from a slight downtick in the dollar and rising uncertainty in other asset classes.

Asian and European equities markets were pummeled on Thursday, picking up where U.S. indexes left off, with technology stocks badly hit as investors redoubled their focus on slowing global growth, rising bond yields and persistent anxieties over trade tensions.

Mild selling across the industrial metals sector was prompted by the drops in other asset classes, said Carsten Menke, commodity analyst at Julius Baer.

However, "the reaction suggests to me that it's mainly an equity market selloff, partly because metals haven't done as well as stocks," Mr. Menke said. "We see metals prices as having bottomed out after a summer selloff in which we think selling went too far, too fast."

That downbeat trading elsewhere in the market distracted metals investors from a slightly lower dollar, the movement of which has been the key focus of trading in the sector in recent months.

The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was last down 0.2%, extending its five-day losses to 0.5%. That said, the greenback has still risen more than 4.5% so far this year, with dollar-denominated commodities having become more expensive for other currency-holders.

Copper prices soared to a four-year high in June, but have faced double-digit percentage losses, with investors focusing on rounds of import tariffs exchanged between Beijing and Washington.

Those hoping for a sustained relief rally may be disappointed, though, according to Wood Mackenzie analysts in a note.

A combination of those stubborn trade worries and slightly better than average supply forecasts mean that "the scope for any uplift in prices over the next several years will be restrained," the analysts said.

Investors were awaiting a slew of Chinese economic figures, including monetary supply, new loans and import and trade balance numbers, all due out later in the week.

Among precious metals, silver was up 0.52% at $14.40 a troy ounce, palladium was down 0.35% at $1,063.50 a troy ounce and platinum was down 0.15% at $826.10 a troy ounce.

Among other base metals, zinc was down 0.17% at $2,612.50 a metric ton, tin was flat at $19,000 a metric ton, nickel was down 1.65% at $12,490 a metric ton and lead was down 1.2% at $1,890.50 a metric ton.

Write to David Hodari at David.Hodari@wsj.com

 

(END) Dow Jones Newswires

October 11, 2018 05:43 ET (09:43 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.


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