China’s Economic Briefing Falls Flat, Sending Commodities Tumbling
In a highly anticipated move, China’s top economic planners failed to deliver on expectations of increased government spending, sending iron ore and base metals plummeting. The National Development and Reform Commission’s briefing, which many had hoped would bring aggressive stimulus measures, instead offered little to investors.
Iron ore futures in Singapore took a hit, falling as much as 4% after initially surging earlier in the session. The disappointing news rippled across Chinese markets, with investor sentiment taking a hit as the country reopened after a week-long public holiday.
Market insiders had been banking on trillions of yuan in stimulus, but the NDRC’s lackluster announcement left them underwhelmed. “The briefing was a complete letdown,” said Hang Jiang, head of trading at Yonggang Resources Co. “There was no concrete plan to boost the economy, just a rehash of old promises.”
Iron ore, which has seen a significant jump in recent weeks on hopes of a steel industry revival, fell 2.9% to $107.50 a ton on the Singapore exchange. Copper, aluminum, and zinc also saw declines, with copper dropping 1.3% to $9,797.50 a ton on the London Metal Exchange.
While some analysts believe China’s recent policy shifts will provide ongoing support for base metals, others caution that global risks, including the US election and weak European growth, will keep prices in check. “We need to see real economic activity picking up before we can expect significant price gains,” said Jia Zheng, head of trading at Shanghai Soochow Jiuying Investment Co.
For now, investors are left feeling disappointed and skeptical, waiting for concrete signs that China’s economic stimulus will translate into tangible results.
Leave a Reply