Copper on the Decline as Markets Worry About Europe Lockdowns, China Sanctions
Arslan Butt • 1 min read
Industrial metal copper is trading bearish on Wednesday amid a prevailing risk-off mood in global financial markets amid escalating fears about the latest round of lockdowns across Europe, which has driven a fresh round of strength in the US dollar as well. At the time of writing, COPPER is trading at a little above $4.
A stronger dollar makes commodities like copper more expensive to purchase for holders of other currencies. This has also reduced the appeal of the metal in markets and turned buyers away for now, causing a decline in prices.
The risk-off sentiment in markets was further triggered by geopolitical tensions between China and the US as well as other leading economies of the West. The US, EU, UK and Canada have announced new sanctions on China over the mistreatment of Uighurs and Muslims, which drove prompt retaliation from China on to European nations.
These tensions have had an especially strong impact in the commodities market as it could adversely affect international trade and manufacturing. Copper is one of the most important metals used in industries, especially electrical and electronic sectors, and any development that can depress activity in these sectors drives down the demand for the metal, turning its price bearish.