The central bank of the world's largest consumer of copper again raised interest rates, pushing down copper futures for the third straight day, Bloomberg reports.
The People's Bank of China rose rates by one-quarter point on Tuesday in anticipation of a report, set to be distributed next week, that economists believe will indicate inflation accelerated to its fastest pace in 30 months.
"A faster and sharper increase of interest rates than previously assumed could ultimately have an adverse effect on commodities and metals demand and thus on prices," a Wednesday report from Commerzbank stated.
At 5:15 p.m. on Wednesday, copper futures were down 1.09 percent, a 0.05 cent drop to $4.5240 per pound.
By raising interest rates, China joins India, Indonesia, Thailand and South Korea, who also have increased their rates. China, though, has done so three times in the past four months.
"Market sentiment will be impacted by the rate hike, and until we get clearer signs of physical activity picking up in China, copper may be a bit subdued," Zhu Haitao, an analyst at Zhongcai Futures, told the news service.
Risk Disclosure
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.