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Copper Update: From an Indian Court to Trade Talks

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Copper Update: From an Indian Court to Trade Talks

The price of copper showed some significant signs of life last week as the red metal pushed over the $2.80 per pound level. That is where it opened this morning after investors had Monday off for President’s Day.

While the eyes of the world will be on trade talks between the U.S. and China this week, surprisingly, the news currently impacting the price of copper is coming from a court in India. Copper prices rose on Monday over concerns that supply will tighten after India’s Supreme Court got involved with one of the country’s larger mines.

Plans to restart operations at Vedanta’s 400,000-ton-per-year copper smelter in the Indian state of Tamil Nadu stalled after the Supreme Court ordered the company to restart its legal appeal. This may not sound like huge news here in the states, but the decision should keep imports of the red metal into India elevated this year.

Legal woes of a different matter in Indonesia are also pushing copper higher to start the week. PT Freeport’s Grasberg mine’s copper export permit expired last Friday. As of this morning, the company still hasn’t received a recommendation to export from the Indonesian mining ministry.

Even further news fueling a surge in copper is a strike in Peru. Trucking companies in Peru, the second largest copper supplier, went on indefinite strike on Monday on rising fuel prices, taxes and road tolls.

All of this is just copper being copper. What isn’t the norm for the market, for global markets, is the impact of the above-mentioned trade talks between the U.S. and China. Both sides will be at the bargaining table again today, this time in Washington. This follows a round of negotiations that ended in Beijing last week without a deal but which officials said had generated progress on contentious issues between the world’s two largest economies.

President Donald Trump, who suggested last week that he could extend the March 1 deadline for the talks, reiterated in a speech on Monday that the negotiations had been fruitful.

“We’re making a lot of progress. Nobody expected this was going to be happening,” he told a crowd in Florida.

Frequent tED contributor Andrew Hecht of Seeking Alpha weighs in on the red metal. “Copper rallied last week despite strength in the dollar index,” states Hecht. “But it was optimism over the trade deal with China that caused the price of the red metal to move back above the $2.80 per pound level on the March futures contract. A trade deal that ends the period of protectionism could launch the prices of the metal and the stock, while a continuation of tariffs and retaliatory measures could cause them to fall to new and lower lows.”

The Rest of the Week

The Fed on Wednesday is due to publish the minutes of its January meeting where its kept rates on hold and surprised markets by shifting to a more dovish stance on future rate hikes, citing subdued inflation and rising risks to global economic growth.

This week will also see speeches from a number of Fed officials, including New York Fed President John Williams and St. Louis Fed head James Bullard.

Market watchers will be looking ahead to Thursday’s durable goods report for an update on the health of the manufacturing sector, while a report on existing home sales the same day will give fresh insight into the housing sector, which lost momentum late last year amid higher interest rates and property prices.

Ahead of the coming week, Investing.com compiled a list of significant events likely to affect the markets.

Monday, February 18

The U.K. published industry data on house price inflation.

Financial markets in the U.S. were closed for President’s Day.

Tuesday, February 19

The Reserve Bank of Australia is to publish the minutes of its latest policy-setting meeting.

The U.K. is to publish its monthly jobs report.

The ZEW Institute is to publish a report on German economic sentiment.

Wednesday, February 20

Australia is to publish data on the wage price index.

The Federal Reserve is to publish the minutes of its January rate-setting meeting.

Thursday, February 21

Australia is to release its jobs report.

The euro zone is to release data on private sector business activity.

The European Central Bank is to publish its meeting minutes.

The U.S. is to release data on durable goods orders, jobless claims, existing home sales and manufacturing activity in the Philadelphia area.

Friday, February 22

The Ifo Institute is to publish a report on German business climate.

The euro zone is to release revised inflation data.

Canada is scheduled to produce data on retail sales.

ECB President Mario Draghi is to speak at an event in Bologna.

A number of Fed officials, including New York Fed President John Williams, St. Louis Fed head James Bullard and Fed Governors Randal Quarles and Richard Clarida are to speak at the U.S. Monetary Policy Forum, in New York.

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