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Markets

Copper dips as US-China tensions simmer, economy weighs

  • Investors were reminded of the consequences of the virus as the number of people in work in Britain suffered the biggest drop in a decade.
11 Aug, 2020

LONDON: Copper dipped on Tuesday as investors worried about rising US-Sino tensions, the economic impact of the COVID-19 pandemic and a firmer dollar.

The US health secretary attacked China's response to the COVID-19 crisis on Tuesday as he visited Taiwan, regarded by Beijing as a breakaway province. He was the highest-level US official to visit in four decades.

"Today we're drifting lower and geopolitics is playing its part. Copper looks a bit toppish and we had a warning shot on Friday when the market took a tumble," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

Three-month copper on the London Metal Exchange was down 0.4pc at $6,372 a tonne by 1005 GMT after dropping to a one-month low on Friday and rebounding by 1.4pc on Monday.

Investors were reminded of the consequences of the virus as the number of people in work in Britain suffered the biggest drop in a decade.

If copper sees renewed challenges to the downside, Friday's low of $6,226 is a key level, Hansen said.

"A move below that would signal a break of the uptrend since the March low and then we could see quite a significant correction, I'd say at least down towards the $6,000 level."

Copper has rallied by 45pc since hitting four-year lows of $4,371 in March.

The US dollar maintained its gains on Tuesday after rising to a one-week high against the euro. A stronger dollar makes metals priced in the US currency less attractive to users of other currencies.

China's auto sales in July climbed 16.4pc from a year earlier, the fourth consecutive month of gains in the world's biggest vehicle market.

LME aluminium rose 0.2pc to $1,789.50 a tonne after touching $1,992.50, the highest since Jan. 24, while zinc shed 0.3pc to $2,391.

Nickel slipped 0.6pc to $14,195, lead climbed 0.9pc to $1,916.50 and tin edged down 0.1pc to $17,705.

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