Industrial metals including copper and iron ore retreated on expectations the Fed will keep monetary policy tight for longer, and as risk-averse sentiment deepens before China’s Golden Week holidays.
“The Federal Reserve’s hawkish narrative has led to soaring US dollar and bond yields, constraining the copper price to a certain extent,” Huatai Futures Co. wrote in a note. “China’s domestic consumer demand is also slowing as the holiday nears.”
A gauge of dollar strength hit its highest level this year on Wednesday, while Chinese markets start their Golden Week holiday from Friday.
In China, the ongoing slump in the housing market remains a major risk to the nation’s economic outlook and metals demand. In the latest twist in beleaguered developer China Evergrande Group’s debt crisis, shares in the company and its units were suspended from trading in Hong Kong.
Iron ore futures in Singapore fell 0.5% to $115.95 a ton as of 12:01 p.m. local time, after rising 1.3% on Wednesday. Copper and nickel on the London Metal Exchange dropped 0.4% and 0.6% respectively, while aluminum steadied.
