CREDIT: REUTERS/NGUYEN HUY KHAM
By Pratima Desai
LONDON, Aug 30 (Reuters) - Copper prices fell to their lowest in more than two weeks on Monday after U.S. central bank chief Jerome Powell warned of a painful period of slow economic growth and fresh COVID restrictions in top consumer China hit sentiment.
Benchmark copper CMCU3 on the London Metal Exchange was down 3.7% at $7,861 a tonne at 1041 GMT having earlier hit $7,846, the lowest since Aug. 8.
The Federal Reserve is expected to raise rates by 75 basis points for the third consecutive policy meeting in September to combat inflation. Powell also said the Fed will not quickly dial back on monetary policy until inflation is under control. "Copper prices have been hit recently with concerns over a 'hard landing' after Powell's Speech last Friday," said Giles Coghlan, analyst at broker HYCM.
"This week U.S. labour data will be in key focus and I expect base metals to take their next cue from there."
Powell's warning on interest rates has also pushed the dollar to 20-year highs against other major currencies, making dollar-priced commodities more expensive for holders of other currencies, which would subdue demand. FRX/
Concern about China's demand was reinforced after Shenzhen shut the world's largest electronics market of Huaqiangbei and suspended service at subway stations in a bid to curb a COVID outbreak.
Industrial metals markets will take their cue from a survey of purchasing managers in China's manufacturing sector, due on Wednesday. Expectations are for further shrinkage.
On the plus side, China has announced billions of yuan worth of stimulus support for various sectors, including infrastructure and electric vehicles.
"There is a view that Chinese stimulus will help," said Bank of America analyst Michael Widmer. "But there is also apprehension about demand, particularly outside China."
For aluminium, the resumption of power in the Sichuan province, which will increase supplies in China is a negative, but analysts say power problems in Europe will provide support for prices.
Aluminium CMAL3 was down 4.1% at $2,391, zinc CMZN3 fell 1.8% to $3,500, lead CMPB3 gained 0.2% to $1,989, tin CMSN3 ceded 1.8% to $24,305 and nickel CMNI3 slipped 0.5% to $21,520 a tonne.
(Reporting by Pratima Desai; editing by Kirsten Donovan)
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