Chicago 16/06/2016 - The copper market tilted back into negative territory Thursday in the US amid a combination of a stronger dollar and worsening global growth expectations.
Copper for July settlement on the Comex division of the New York Mercantile Exchange tumbled 4.30 cents or two percent to $2.0480 per pound. Trade ranged from $2.0355 to $2.0930.
Markets are in turmoil after global central bankers issued warnings over growth, signs of deflation in Japan and the potential British exit from the European Union. Meanwhile, the dollar is hovering around a two-week high at 94.58, applying pressure on the entire commodities sector.
In her press conference following the Federal Reserve statement release, Chair Janet Yellen mentioned specifically that the UK referendum gave pause to the 15 member policy-board and forced roughly half to reduce the number of expected hikes to one from two.
"Market sentiment in Europe continues to be weighed down by concerns over a possible Britain vote to leave the European Union and negative comments from the FOMC," George Gero of RBC Wealth Management said. "Yesterday, Fed Chairman Yellen alluded to the new normal which denotes long term stagnate growth and low interest rates."
The June 23 vote is starting to show a majority of UK citizens preparing to leave the single market primarily due to concerns over immigration and potential future bailouts similar to Greece.
The decision has grown even more contentious in recent days with new polls showing the Leave camp separating from the Remain campaign. The Bloomberg Brexit tracker currently has the odds of a Brexit at 39 percent, which is nearly double from the beginning of the week.
"We should get a clearer picture over the next several days, but first we need to get over the Brexit vote on the 23rd and hope that the outcome – whatever it is – does not destabilize the markets too much," Edward Meir, analyst at INTL FCStone, said.
In a packed data day, the Philly Fed manufacturing index in June came in at 4.7, besting the forecast of 1.1. First quarter current accounts balance stood at -125 billion, in-line with projections, while the weekly unemployment claims from June 3-10 were at 277,000, a touch above the estimate of 267,000.
CPI month-over-month in May ticked up 0.2 percent, missing consensus of a 0.3 percent gain, while CORE CPI – excluding food and energy prices – over the same period met expectations at a 0.2 percent increase.
Turning to US markets, the Dow Jones industrial average and S&P were up 0.3 percent and unchanged respectively, while the dollar gained 0.2 percent to $1.1240 against the euro.
In other commodities, light sweet crude (WTI) oil futures on the Nymex tumbled $1.72 or 3.6 percent to $46.29 per barrel while the most-actively traded Comex gold contract stood at $1,289.70 per ounce, up $1.40 or 0.1 percent.
(Editing by Tom Jennemann)