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Trends & Analysis
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Week Ahead Preview: 22nd of April

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Trends & Analysis
News

Week Ahead Preview: 22nd of April

News

P&G shares rise despite Q3 sales miss

News

Gold continues to shine amid geopolitical worries

News

Crude oil dips for 3rd session after supply data

News

Is there an AI upside for AMD?

News

GBP/USD recovers following wage report

Asset Watch

A copper comeback?

Tuesday, June 6, 2023

With the debt ceiling drama and fears of an imminent recession hammering cyclical stocks, assets like copper were caught in the storm. However, after U.S. lawmakers reached an agreement to avoid a potential default, many of those clouds have dissipated.
U.S. nonfarm payrolls came in at 339,000 versus 190,000 expected on Jun. 2, marking the 29th consecutive period of positive employment growth. And as the labour force participation rate increases and wage inflation cools, a soft landing could be possible after all.
If so, copper could be a major beneficiary.
The black line below tracks the copper futures price, while the green line below tracks Caterpillar’s stock. Amid the bullish frenzy on Jun. 2, the world’s largest construction equipment manufacturer surged by more than 8%. Though the pair often move in tandem, a noticeable divergence has emerged on the right side of the chart, with copper unable to garner the same enthusiasm. Yet, if Caterpillar gains sustainable traction, copper may not be far behind.

While China’s economic recovery has been uneven, warmer weather could entice more consumer spending, which helps boost factory production, exports and demand for raw materials.

The only caveat is copper’s 50-week moving average stands at $3.76, which is only four cents above the Jun. 2 close and has been resistance for the last three weeks. Therefore, patience is prudent.

Should you keep a close eye on copper, or was Caterpillar’s rally a one-day event?


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