(Bloomberg) --
Copper concluded a fifth weekly loss, its longest losing streak in more than two years, as U.S. monetary tightening and China’s Covid-19 outbreaks darkened the demand outlook.
All major base metals fell on the London Metal Exchange as stocks and bonds slid and the U.S. dollar rose, while accelerating inflation, rising borrowing costs and lockdowns in China depressed sentiment. Higher inflation will boost commodities including metals’ appeal as an inflation hedge, but a potential slowdown in demand from top consumer China outweighs metals’ appeal.
China’s response to virus outbreaks are stoking angst over its economic impacts. China’s top leaders warned against questioning Xi Jinping’s Covid-zero policy as pressure builds to relax restrictions and protect economic growth.
Read: China’s Economy Slows Rapidly as Covid Zero Lockdowns Bite
“The lockdowns remain in place in China, depressing the economy and dampening demand for metals,” Daniel Briesemann, an analyst at Commerzbank AG, wrote in a note. With more sanctions on Russia for its war in Ukraine remaining a possibility, he sees the latest slide in metals prices as “excessive” and expects higher prices to return once the correction ends.
U.S. hiring advanced at a robust pace in April, a U.S. Labor Department report showed Friday, yet a smaller workforce may increase pressure on employers to boost wages even more to bring employees back. That dynamic will likely complicate the Federal Reserve’s fight to tame decades-high inflation.
Copper on the LME settled 0.8% lower to $9,414.50 a metric ton, and sank 3.6% for the week. Aluminum slumped 2.5% and capped its worst week since October. Zinc plunged 3.4%.
©2022 Bloomberg L.P.
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