Written by Sumit Roy
We examine the latest developments in the copper market.
Copper prices are on the rebound in recent sessions after tumbling throughout the first half of April. The industrial metal has shown a high correlation with other risk assets such as stocks, which have together been influenced by macroeconomic developments.
The heart of recent concern lies in the U.S. labor market. Today we learned that the number of people filing for unemployment claims in the U.S. fell by only 1,000 to 388K last week, leaving them near the highest level of the year.
In aggregate, the data this year has been positive; fluctuations in the data are normal and to be expected. That is the view the market seems to be taking given the recent rebound in prices. We tend to agree, although continued volatility until there is more clarity on the labor market is possible.
As always, however, the outlook for China is the most important with regard to copper. After all, almost 40 percent of global demand for the industrial metal comes from the Asian giant.
Recent data indicate that growth in the country may be picking up. The PMI Manufacturing gauge hit the highest level in a year in March. April’s figures will be released on Monday.
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