After big falls last week the planned re-opening of Chinese mainland share and commodity markets, as well as trading in cities such as Tokyo, Hong Kong, and Singapore could see more big losses for a second week. (See separate stories on markets and also iron ore).
Copper lost 6.4% last week and is down 10% for the year to date, oil dropped between 5% and 6% last week and over 15% for the month.
Comex gold though did well, again, rising 0.6% for the week to settle at $US1,587.90 an ounce for year to date gain of just over 4%.
Gold should chase higher for most of this week especially with Chinese markets set for a nervous few days.
Comex March silver added 2 cents, or 0.1%, to $US18.012 an ounce, with most-active contract up by 0.5% for the month.
March copper edged down 0.3% to $US2.517 a pound, for a monthly decline of about 10%.
“Certainly, the market has forged significant demand destruction price action already but given the images of empty thoroughfares, empty shopping malls and most importantly, empty major train stations the setback in Chinese copper demand is going to be significant in the months ahead,” analysts at Zaner Metals wrote in a daily report Friday.
In other metals trade, April platinum lost 1.9% at $US961.90 an ounce, with most-active contract prices down about 1.6% year to date, while March palladium rose 0.4% to $US2,224.70 an ounce, for a very solid monthly rise of 16.5%.
Meanwhile, oil prices look like heading lower after a fourth straight weekly loss on mounting worries about economic damage from the coronavirus that has spread from China to around 20 countries, killing more than 200 people.
Oil futures ended lower on Friday, suffering big monthly and weekly falls, as traders assessed the spread of China’s coronavirus and its potential impact on global economic growth and demand for crude.
Analysts say US oil futures could test $US50 a barrel if they fall under $US52 in coming weeks. That would be back to lows a year ago.
Goldman Sachs said the outbreak was likely to shave 0.4 percentage point from China’s economic growth in 2020 and could also drag the US economy lower.
Many companies in China planned to return to work on Friday after a week-long celebration of the Lunar New Year holiday, but authorities ordered businesses in many areas to stay shut longer to contain the disease.
US farm machinery group, John Deere has shut its Chinese factories while Caterpillar issued a subdued outlook for 2020 after revealing solid quarterly earnings on Friday. Apple is closing its stores in china for the week.
Growth in China’s factory activity faltered in January. The Purchasing Managers’ Index (PMI) fell to 50.0 from 50.2 in December, China’s National Bureau of Statistics (NBS) said. The 50-point mark separates growth from contraction. The services sector survey rose to 54.1 though.
“A sense of unease and uncertainty about the widening crisis and ramifications to global growth may result in further pain for oil,” one analyst wrote on Friday in the US. “Given how China is the world’s largest energy consumer, a slowdown in demand has the ability to bruise and potentially destabilise oil markets.”
On Friday, West Texas Intermediate crude for March delivery fell by 58 cents, or 1.1%, to settle at $US51.56 a barrel in New York. That was the lowest front-month contract settlement since the start of last August.
March Brent crude lost 13 cents, or 0.2%, to end at $US58.16 a barrel on the contract’s expiration day. April Brent which is now the front-month contract, shed 71 cents, or 1.2%, to $US56.62 a barrel.
WTI, the US benchmark, logged a 4.9% weekly fall, and a 15.6% January decline. That was the largest monthly loss since a 16.3% May decline for the front-month contract.
The now-expired March contract for Brent, the global benchmark, lost 4.2% for the week, for a nearly 12% January fall.
In other energy trading, February gasoline lost 0.3% to $US1.4887 a gallon, with prices down over 12% for the month. February heating oil fell 0.9% to $US1.6245 a gallon, for a monthly loss of nearly 20%—the largest since March 2015 and lowest settlement since August 2017.
March natural gas edged up by 0.7% to settle at $US1.841 per million British thermal units for a monthly loss of nearly 16%.
US crude production climbed 203,000 barrels per day (BPD) to a record 12.9 million BPD in November, America’s Energy Information Administration said in a monthly report on Friday and the weekly estimate is running at just over 13 million barrels.
