Copper ticks higher as Fed rate hike bets fade
- Benchmark three-month copper on the London Metal Exchange was up 0.6% at $14,346 a metric ton
Copper rose for a second straight session on Monday, tracking equity markets higher and as fading prospects for a US Federal Reserve rate hike outweighed pressure from a strong dollar.
Benchmark three-month copper on the London Metal Exchange was up 0.6% at $14,346 a metric ton as of 0951 GMT. The metal hit a record high of $14,875 on September 10 on concerns of tight supplies outside the US before losing ground last week.
“Copper is helped by [an] uptick in equities as US Fed rate hike possibilities in October are dimming,” said Sandeep Daga, head of research at Metal Intelligence Centre.
The pan-European STOXX 600 gained 0.2% after hitting a four-month low last week as global bond yields surged on inflation, higher corporate bond issuance, and worsening fiscal outlooks. Japan’s Nikkei share average, meanwhile, posted a three-month closing high on Monday.
Odds of an October US rate hike fell after weaker-than-expected US jobs data last week. Rate traders are now pricing in an 18% chance of a rate hike at this month’s Fed meeting, down from 71% a week ago, according to the CME’s FedWatch tool.
Higher interest rates can dampen economic activity and weigh on demand for growth-dependent industrial metals like copper.
The dollar rose to a near-17-month high against the euro. A stronger dollar can weigh on greenback-denominated metals by making them more expensive for buyers using other currencies.
The market is awaiting the return of top metals consumer China on Thursday to gauge fourth-quarter buying interest. Chinese copper stocks are thin, and smelter maintenance suspensions are lined up, but domestic demand also appeared weak, Daga said.
The cash LME copper contract was trading at a nearly $63 a ton premium over the three-month forward, up from $53.50 on Friday, indicating tightening near-term supply.
Aluminium touched its lowest since July 3 before rebounding to trade up 0.4% at $3,111.50 a ton, poised to snap a five-day losing streak.
Zinc dipped 0.1% to $3,708, lead added 0.8% to $1,865.50, nickel nudged up 0.5% to $15,700, and tin gained 0.4% to $54,190.
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