Commodities, from oil to iron ore and copper, rose after China eased some restrictions on Covid, raising hopes for a pickup in demand in the world’s second-largest economy.
Nearly all major commodities rose after news that China reduced the amount of time travelers and close contacts of infected people must spend in quarantine, a significant change in Covid Zero policy.
The China news reinforced the rally that began on Wall Street, with risk assets broadly up on the back of lower-than-expected U.S. inflation data that set the stage for a slowdown in aggressive interest rate hikes.
In China, industrial commodities, from copper to iron ore and steel, surged. Iron ore futures in Dalian soared 6.6 percent, the biggest gain in more than three months. Tin and nickel rose 9.1 percent and 4.1 percent, respectively.
The news will further fuel speculation about a wider relaxation of China’s Covid control measures, which is good for energy and commodities. However, some market participants were less optimistic. Although the loosening of some rules is a step in the right direction, the jump in oil prices seems like an overreaction as China will likely continue to pursue its Covid Zero policy.
Commodity Evolution’s research office on Oct. 26 had already predicted the current upward phase (read the article here).
The easing comes at a time when Covid cases have increased nationwide, with major outbreaks in Guangzhou and Beijing. Nonferrous metals are currently in a decidedly bullish phase:
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