Metals including copper, aluminum, and zinc rebounded in London after a shaky few days of trading fueled by fears of more aggressive tightening by the Federal Reserve. Risk appetite returned to Asia on Friday after a sharp selloff the day before, triggered by stronger-than-expected US inflation and fears over Fed rate hikes. Copper snapped a three-day decline, aluminum bounced from its lowest close this year, and zinc jumped as much as 1.5%.
US monetary policy is likely to be a key driver of metals in the coming months, but geopolitics, trade policy and the potential impact of artificial-intelligence spending are also important. BMI, a Fitch Solutions company, noted that industrial metals will continue to post mixed performance, caught between a challenging macroeconomic backdrop and increasingly divergent commodity-specific fundamentals, with tighter monetary conditions limiting broad-based upside. The more positive sentiment on Friday was aided by comments from Fed Chair Kevin Warsh, who said investment in artificial intelligence is a huge benefit to the US economy.
While he didn't comment on monetary policy, bets on a rate hike slipped after his speech in Bangkok. Copper rose 0.9% to $14,477 a ton on the London Metal Exchange as of 12:51 p.m. in Shanghai, while aluminum climbed 1% to $3,017 and zinc was 1.3% higher at $3,711.50 a ton. Citigroup Inc. said it's "near-term neutral" on copper and aluminum, seeing prices little changed from near current levels in the coming three months.
Positioning in both metals is elevated with 2027 balances looking close to flat for copper and in surplus for aluminum amid stronger supply growth expectations.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing