UPDATE: While this “Exclusive Feature” story contained significant relevance right after the Presidential election, much has changed in the copper market over the past 24 hours. For the latest update on copper prices today and over the next 6 months, please click here. Meanwhile, tED magazine and tedmag.com will continue to track this story so you can receive the news you need about copper prices.
—Scott Costa, Publisher
—
By Jim Williams
As the numbers for the Presidential election kept moving in Donald Trump’s favor Tuesday and into the early morning Wednesday, the price of copper edged lower in overseas trading. Copper’s immediate reaction to Trump’s victory was a two percent drop.
The U.S. dollar sank and stocks plummeted as the election results kept pointing towards a Trump victory as investors braced for what looked like a disruption in the global political order.
As Trump continued claiming electoral votes, investors became increasingly uneasy and share prices tumbled in Asia, which were open during the election results. Dow futures were down 4 percent at one point. However, the “sky is falling’ mentality seemed to subdue after Trump’s acceptance speech in the early morning hours Wednesday where he praised his opponent and urged Americans to “come together as one united people.”
Some experts believe Trump’s victory could mean the U.S. Federal Reserve will be less likely to raise its key interest rate at its next meeting in mid-December. “Less chance of a Fed rate hike also helps keep investors smiling at the prospect of cheap money and accommodative global monetary policy stance for a while longer,” said Mike van Dulken, an analyst at Accendo Markets.
Trump and China
What does a Trump victory do to U.S. trade relations with China and across Asia? Trump’s victory has raised concerns that the U.S. and China might escalate a trade war of sorts and that protectionism around the world will grow. In Asia, Japan’s Nikkei 225 stock index closed 5.4 percent lower. Hong Kong’s Hang Seng closed 2.2 percent lower, while the main index in Shanghai fell 0.6 percent.
We will keep an eye on the U.S.–China relationship as Trump transitions into the Oval Office.
The Silver (Copper) Lining…
Despite the initial knee-jerk reaction to the election, one thing President-elect Trump and his opponent Hillary Clinton both agreed on in their campaigns was the need for infrastructure upgrades. “Airports, roads, even building a border wall and many other projects will require base metals,” said Andrew Hecht from Seeking Alpha, and frequent contributor to tED.
“Additionally, the U.S. central bank has said that for monetary policy to work it needs to be accompanied by fiscal initiatives. An infrastructure upgrade project would provide jobs and stimulus to the economy that is more sustainable for the economy than the low interest rate policies of the past eight years,” adds Hecht.
What A Difference A Day Makes
This comes a day after the red metal’s highest level in over a year.
The daily copper chart illustrated the swift trajectory of the metal that has moved from $2.0845 on October 20 to yesterday’s highs, a rally of 14.1% in just 13 trading sessions. One of the reasons for the rally in copper has been the decline in London Metal Exchange inventories.
Inventories held on the LME fell for the fourteenth straight day Tuesday and are now down 34 percent over the past six weeks – from over 350,000 tons to 298,400 as of November 7.
China’s imports of copper fell 14.7 percent from a month ago to 290,000 tons in October, its lowest since February 2015, customs data showed on Tuesday.
Tagged with tED