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China GDP Drops Again
Copper prices are trading in a muted fashion across the European morning on Monday. The latest economic data out of China overnight has done little to inspire confidence amongst bulls. Q2 GDP was seen falling to 4.7% from 5.3% prior, below the 5.1% the market was looking for. Growth is now at its lowest level since Q1 2023. Additionally, annualised industrial production was seen at 5.3% last month, while slightly higher than the 5% the market was looking for, the reading marks a decline from the prior 5.6% reading and is the second consecutive monthly decline.
Weak China Data an Issue
Weaker China data has been a major headwind for copper prices in recent months. After a strong start to the year, China data began fizzling out through the end of Q1. Hawkish fed expectations over late Q2 added to bearish sentiment leading to the unwinding of the sizeable copper rally which had previously been in place. Copper futures are now down around 12% from the YTD highs but are still up more than 17% on the year.
Bullish Factors
Despite the current pullback, there are still clear bullish drivers to note in the copper outlook. With Fed easing expectations now back in the spotlight following three consecutive monthly CPI declines and USD weakening consequently, copper should find room to rally again in coming weeks and months. For now, the market is treading a fine line between the support from Fed easing expectations and the bearish impact of rising China (and now US) economic concerns.
Technical Views
Copper
The recent rally has stalled for now into a retest of the underside of the broken bull channel with price slipping back below 4.5785. While below here, a fresh test of 4.3000 support cannot be ruled out. However, back above, focus will be on the 4.8400 resistance next.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.