August 2, 2019 / 10:33 AM / 20 days ago

METALS-Copper clocks biggest weekly fall in a year on U.S.-China trade war

* GRAPHIC-2019 asset returns: tmsnrt.rs/2jvdmXl

* Metals markets hit by Trump threats: tmsnrt.rs/2MxyjOT (Updates with closing prices, adds bullets)

By Peter Hobson

LONDON, Aug 2 (Reuters) - Copper prices on Friday posted their steepest weekly fall in a year after President Donald Trump said the United States would impose more tariffs on Chinese imports, escalating a trade war seen weakening economic growth and metals demand.

Trump's announcement sent shockwaves through global markets, pushing equities, bond yields, oil and industrial metals sharply lower, with zinc tumbling to its lowest in 11 months.

It also drove the dollar to a two-year high ahead of U.S. jobs data, and pummelled China's yuan, making metals more expensive for Chinese buyers who are their biggest consumers.

Benchmark copper ended 2.9% lower at $5,729.50 a tonne after earlier matching a January low of $5,725.

It was around 4% lower this week, the biggest weekly fall since August 2018.

The U.S.-China trade war and a deepening slowdown in factory activity in China and elsewhere have hit industrial metals hard, with copper down around 20% from highs in June last year.

Trump's announcement came after the U.S. Federal Reserve tempered expectations of sustained interest rate cuts which could have stimulated growth and helped weaken the dollar.

"There was quite a bit of optimism around the trade talks earlier in the week and about the Fed," said ING analyst Warren Patterson. "Both have disappointed."

TRADE WAR: Trump said he would impose a 10% tariff on $300 billion of Chinese imports from Sept. 1, extending tariffs to nearly all Chinese goods the United States imports and ending a temporary truce in the two countries' trade row. He also threatened to raise tariffs further if China's President Xi Jinping failed to move more quickly to strike a trade deal.

China said it would not be blackmailed and warned of retaliation.

U.S. ECONOMY: Metals fell despite a weaker dollar after U.S. job growth slowed in July and manufacturers slashed hours for workers. [nLNS2JEF87

JAPAN: Japan's economic growth is expected to have slowed in the second quarter, according to a Reuters poll.

NICKEL: BHP plans to start production of nickel sulphate in the second quarter of next year, an executive said.

OTHER METALS: LME zinc fell 2.2% to $2,351 a tonne, nickel eased 1% to $14,450, lead shed 1.9% to $1,952, tin lost 2% to $16,975 and aluminium was 0.6% lower at $1,770.

Reporting by Peter Hobson; Additional reporting by Mai Nguyen; Editing by Edmund Blair and Emelia Sithole-Matarise

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