MARKET COMMENTARY
Copper and other metals have been supported by relief that China's economy is proving more resilient than expected, partly due to easier liquidity ahead of China's national congress later this year which has fed metals demand. A pick-up in the industrial sector helped China post better-than-expected second quarter economic growth as finance and real estate expansions slowed to multi-year lows. China's exports and imports grew much less than expected in July, raising concerns over whether global demand is starting to cool even as major Western central banks consider scaling back years of massive stimulus support. China's copper imports rose 8 percent in July from last year as the availability of credit improved, even as concerns lingered about manufacturing activity.
The Federal Reserve kept interest rates unchanged on 27th July and said it expected to start winding down its massive holdings of bonds "relatively soon" in a sign of confidence in the U.S. economy. A gauge of U.S. factory activity slid from a near three-year high in July amid a slowdown in new orders and consumer spending barely rose in the prior month, setting the stage for a moderate economic expansion in the third quarter. Federal Reserve policymakers appeared increasingly wary about recent weak inflation and some called for halting interest rate hikes until it was clear the trend was transitory, according to the minutes of the U.S. central bank's last policy meeting.
The dollar dipped, making dollar priced metals cheaper for non-U.S. investors, while world stocks, seen as a proxy for growth, breached new records on better-than-expected company earnings and strong U.S. jobs data. North Korea were the right response to a series of missile tests, but dialogue was vital to resolve a complex and sensitive issue, now at a "critical juncture". North Korea said it is "carefully examining" plans for a missile strike on the U.S. Pacific territory of Guam, just hours after U.S. President Donald Trump told the North that any threat to the United States would be met with "fire and fury”. The dollar firmed this week after North Korea's leader signalled that he would delay plans to fire a missile near Guam, further easing tensions and prompting investors to move back into riskier assets. Also
Copper prices were at their highest since 2014 as rises across most industrial metals triggered pre-set buy orders and a wave of speculative buying and supported by a weaker dollar and increasingly upbeat views about China's economic growth and metals demand. Benchmark copper was 2.5 percent higher at $6,580 on 17th August, its highest since November 2014. But the gains came despite data showing China's home price growth slowed in July, reinforcing expectations that property price growth may stagnate over the course of the year, a negative for industrial commodities. Also metals were set in downward motion on 17th August by weaker than expected U.S. industrial production, which rose only 0.2 percent in July.