Copper ETFs Rust as Trade War Fears Reignite
This article was originally published on ETFTrends.com.
Copper prices and related copper ETFs retreated Tuesday on renewed trade war concerns after President Donald Trump threatened additional tariffs on Chinese goods.
On Tuesday, the iPath Bloomberg Copper Subindex Total Return ETN (JJCTF) fell 1.6%, United States Copper Index Fund (CPER) dropped 1.1% and iPath Bloomberg Copper Subindex Total Return ETN (NYSEArca: JJCB) was flat. Both JJCTF and CPER broke back below their short-term trend lines at the 50-day simple moving average.
Copper prices have been stuck in a rough patch this year, weakening on escalating tensions between the U.S. and China and softening global growth.
Copper further weakened on Tuesday after President Trump threatened additional tariffs on Chinese goods, which muted hopes that the meeting between the U.S. president and Chinese leader Xi Jinping at the Group of 20 Summit in Buenos Aires later this week would lead to a meaningful discourse and de-escalation in trade tensions, the Wall Street Journal reports.
“Investors didn’t need that sort of wake-up call from the president headed into a major meeting for trade negotiations,” Robert Pavlik, chief investment strategist and a senior portfolio manager at SlateStone Wealth, told the WSJ. “Investors were looking to the G-20 meeting as a lifesaving line, but Trump threw cold water on it by talking too tough on trade.”
Trump warned that he would push forward with new tariffs if negotiations don't pan out, adding that it was "highly unlikely" that he would accept Beijing's request to hold off on the tariff hikes next year.
“If we don’t make a deal, then I’m going to put the $267 billion additional on” at a tariff rate of either 10% or 25%, Trump told the Wall Street Journal. The president first threatened those duties, and the higher tariffs on the initial $200 billion in goods, in late summer.
Along with the trade concerns, copper prices were weakening on softening global economic data. The base metal is a major component in many industries, including construction, and is widely seen as a barometer for global economic health.
For more information on the copper market, visit our copper category.
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