Watch oil and copper prices which are already under pressure from investors fearful of the impact of the growing coronavirus crisis on China’s economy.
That threat seems to be accelerating with the Chinese government extending the Lunar New Year holiday by three days from this Friday to try and contain the spread of the virus as more people die and more cases are reported. As well the virus has now appeared in at least 14 other countries.
Copper has long been seen as an indicator of the health of the Chinese economy and last week saw that rating move decisively to negative as Comex copper futures plunged 5.7%, US oil futures slumped more than 7% as did Brent futures.
Comex copper futures fell another 3% (to around $US260 a pound) on Monday, taking the fall in five days of trading to nearly 9%.
That’s a clear sign investors and traders are very nervous about the impact the virus could have on Chinese activity and commodity demand.
Iron ore futures fell 4% over the week to end at $US93.71 a tonne for 62% Fe ore delivered to northern China (according to the Metal Bulletin). That compares with $US97.58 a week earlier.
Some of that coming on Friday with a fall of 1.5% to around $US2.68. Last week’s slide has pushed copper lower for the year to date by more than 4.7%.
There was no trading in iron ore yesterday because of the Lunar New Year but heavy rains, floods and landslides in Brazil in the past week (and a warning by regulators about four mine dam walls), have traders on edge.
But China is also the world’s biggest oil importer and prices last week wobbled on the worsening virus crisis.
West Texas Intermediate crude March delivery fell 2.1% to $US53.05 at 7am Tuesday and touched a three month low. That was after it ended last week at $US54.19 a barrel in New York.
The US marker saw a 7.5% weekly drop, its biggest such fall since a nearly 9% drop in the week ending May 31 last year, according to data from FactSet.
Brent crude futures fell 7.3% over the week to $US60.69 a barrel at settlement and finished around $US58.58, down more than 3%.
Comex gold futures gained $7, or 0.4%, to finish at $US1,579 an ounce, up 0.5%. Last week gold was up by about 0.7%.
Comex March silver added 28.4 cents, or 1.6%, to settle at $US18.113 an ounce, and weekly gain of 0.2%. But it dipped to end at just over $US18 an ounce on Monday.
Comex March copper fell 4.2 cents, or 1.5%, to settle at $US2.684 a pound, for a weekly loss of 5.7%. On Monday it ended at $US2.602, down 3%.
