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Copper’s Streak Ends as Trade Tension Heightens

Copper’s Streak Ends as Trade Tension Heightens

Copper’s five-session winning streak has come to an end. Overnight trading in London saw the red metal finish with a negative number thanks to the continued trade dispute between the U.S. and China.

Three-month copper on the London Metal Exchange was down 0.5 percent at $6,225 a ton. Copper opened this morning just under $2.80 a pound.

A wide gap between Washington and Beijing at a summit of Asia-Pacific leaders in Papua New Guinea over the weekend has taken away any momentum of a resolution in the trade war. Leaders at the Asia Pacific Economic Cooperation (APEC) summit failed to agree to a joint communique for the first time in history.

“Trade tension… remains a headwind for the sector. The failure of countries at the APEC meeting to agree to a joint statement raised concerns that the relationship between China and the US remains hostile,” ANZ said in a note.

While both U.S. President Donald Trump and Chinese President Xi Jinping expressed optimism about resolving their trade war ahead of a planned meeting at the G20 conference in Argentina at the end of next week, relations have apparently faltered again.

“The trade tensions have risen again over the weekend, but base metals have held up and I think that’s the consequence of the market taking a bit more of what fundamentals are suggesting,” ANZ’s senior commodity strategist Daniel Hynes told Reuters.

“I don’t think it (the upside) is sustainable,” Hynes continued. “There’ll definitely be an overhang from those trade tensions restricting the upside in base metals until there’s a little bit more clarity around a potential trade deal.”

Frequent tED contributor Andrew Hecht has a different perspective on the red metal’s recent activity.

“The most recent price action in the copper market could be telling us that a trade deal is on the horizon,” writes Hecht. “A trade deal between Presidents Trump and Xi would result in many winners. China would remove one of the issues that have been weighing on their economy and their stock market. President Trump will tell the U.S. he accomplished the impossible and fulfilled a campaign promise to level the playing field on trade. Copper…and many other commodities prices that were in the crosshairs of the trade issue would likely see significant price appreciation as protectionism gives way to a pro-growth environment.”

Click here to read Andrew’s entire Seeking Alpha article Copper Pops Higher – Could It Be Telling Us That A Trade Deal Is Coming?

Looking Ahead

There are a few other items weighing on the markets this week. We will learn more from the UK inflation hearings, U.S. housing numbers, U.S. durable goods orders, Japan CPI, Germany GDP numbers, EU PMI, and Canada’s CPI – to name a few.

Plus, this is one of the busiest weeks in retail. Thanks to Black Friday, followed by Cyber Monday. Traders will pay close attention to the numbers that will come from major retailers.

Here is a complete list of market impacting events, thanks to our friends at www.investing.com:

Monday, November 19

Japan is to release data on trade.

Federal Reserve Bank of New York President John Williams is to speak at an event in New York.

Tuesday, November 20

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

Bank of England Governor Mark Carney and several policymakers are to testify on inflation and the economic outlook before Parliament’s Treasury Committee.

The U.S. is to release data on building permits and housing starts.

Wednesday, November 21

The UK is to release data on public sector borrowing.

The U.S. is to publish reports on initial jobless claims and durable goods orders as well as revised figures on consumer sentiment.

Thursday, November 22

Financial markets in the U.S. will be closed for the Thanksgiving holiday.

The European Central Bank is to publish the minutes of its latest policy-setting meeting.

Friday, November 23

Markets in Japan will remain closed for a holiday.

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

Canada is to round up the week with figures on retail sales and inflation.

Trading in U.S. financial markets will end early after Thursday’s holiday.

Have a wonderful Thanksgiving. We will be back next week with all the news impacting the price of copper.

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Jim Williams

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