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PBoC Rate Cut
Copper prices are surging higher today on the back of a fresh round of fiscal stimulus announced by Chinese authorities overnight. The PBoC announced a reduction in its short-term interest rate and noted that it would slash the reserve ratio for regional banks to its lowest level since 2018. Alongside these measures, the first time that both have been announced in tandem since 2015, the bank detailed additional fiscal measures.
Property Sector & Stock Market Liquidity Support
The PBoC has launched a new stimulus package aimed at buffering the troubled property sector, reducing costs on over $5.3 trillion in mortgages and relaxing the rules around second home purchases. Additionally, the bank announced around $113 billion in liquidity support for stocks and note that it is looking at setting up a market stabilisation fund to provide further support.
Bullish Copper Outlook
There has been plenty of criticism over Chinese authorities for not announcing a broad suite of measures throughout the market volatility of the last 18 months. Today’s announcement, however, has clearly been cheered by markets with local equities soaring an commodities prices ramping higher, feeding into better global risk sentiment on Tuesday, putting pressure on USD. For copper, the near-term outlook is highly bullish now against a backdrop of Chinese fiscal stimulus and Fed monetary easing.
Technical Views
Copper
The rally in copper has seen price breaking out above the 4.3000 level with momentum studies turned firmly bullish. While above this level, focus is on a continuation higher and a test of the 4.5785 level next, with 4.8400 above as a broader target.
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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.