Many were disappointed after Donald Trump’s first press conference. Despite answering questions about intelligence agencies and released reports, Russia and hacking, pharma companies, Mexico’s wall and Obamacare, the US President-elect provided little clarification about his infrastructure spending plans.
As a result, copper, used in construction, dropped on Wednesday, despite reaching a one-month high the day before, supported by inflation figures from China that pointed to further signs of economic recovery.
Trump’s press conference “was a sign of things to come, with his hyperbolic, unpredictable style bringing volatility to investment markets,” said Brien Lundin, editor of Gold Newsletter.
Three-month copper on the London Metal Exchange closed down 0.8 percent at $5,714 a tonne on Wednesday, off an earlier peak of $5,788.50, its highest since December 13. Yet the metal remains up more than 3 percent so far this year.
“I think the markets were hoping for more, so they were disappointed,” Societe Generale analyst Robin Bhar said. “Copper is now down almost $50 on the day.
“If (Trump) isn’t going to bolster growth through fiscal spending, then that’s got to be slightly disappointing compared to the hopes that were being built up post his election win,” he added. “It’s still hope over reality at the moment.”
In the month after the US election, copper surged more than 10 percent, due to Trump’s pledge to boost spending.
But in his first press conference in about six months, Trump, who called some news outlets “fake news” and refused to answer questions from a CNN reporter, did not clarify his future spending plans.
Trump “didn’t impress many people [at the press conference], in fact the fear of potential turmoil in the months and years ahead is creeping back into the market,” said Nico Pantelis, head of research at Secular Investor.
Later this month, a risk of profit-taking in China is also expected before the Lunar New Year.
“Near term, we could see a slight correction, copper has done a lot over the last couple of months and needs to consolidate, but the longer term outlook is positive. We see a deficit in 2017,” said Warren Patterson, commodities strategist at ING.
Looking ahead, Chinese trade data due Thursday should shed more light on the strength of Chinese demand.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.