A recent report from Jinshi Futures highlights the potential market impact of the Federal Reserve’s upcoming interest rate decision in September. Analyst Zhang Weixin of CITIC Construction Investment Futures suggests that the size of the rate cut will be pivotal in determining the market’s reaction, especially for commodities like copper.
A 25 BP rate cut is likely to be seen as a precautionary move, boosting copper prices. However, a more aggressive 50 BP cut could trigger a sell-off in riskier assets, impacting the broader market.
The absence of a rate cut would also create uncertainty. Disappointed expectations could lead to selling pressure, while a continued high-interest-rate environment could raise concerns about the economy, negatively affecting copper prices.
Looking forward, copper prices are expected to remain volatile and weak. Weixin cites a pessimistic outlook for the global economy, with slowing growth in key copper demand areas like new energy vehicles and power investment. Additionally, if copper supply improves next year, the already weak supply-demand balance could deteriorate further.
