Copper inches up as tech rally and Fed rate hike bets influence markets
Copper prices saw a slight uptick on Tuesday, driven by a tech-fueled US stock market rally and reduced expectations of a Federal Reserve rate hike in October. Benchmark three-month copper on the London Metal Exchange climbed 0.08% to $14,431.5 per metric ton by 0300 GMT, marking its third consecutive day of gains. The Shanghai Futures Exchange remained closed for China’s National Day and will reopen on October 8.
Asian stocks followed the previous day’s gains on the Nasdaq, which closed at a record high. Copper, often dubbed Dr Copper for its role as an economic indicator, has benefited from strong demand linked to AI infrastructure, electric grid upgrades, and electric vehicles. However, the US dollar’s strength, fueled by rising Treasury yields, has offset some of these gains by making copper more expensive for buyers using other currencies.
Rate traders now assign a 24% chance of a Fed rate hike in October, down from 71% a week ago, according to the CME’s FedWatch tool. Higher interest rates could curb demand for copper and other growth-dependent commodities by slowing economic activity. Aluminium prices rose 0.16%, despite a 17% drop since June due to easing supply concerns and increased production in Indonesia.
Other metals on the LME showed mixed movements: zinc fell 0.08%, lead dipped 0.03%, nickel lost 0.44%, and tin remained steady.