London Metal Exchange copper hit a 26-month low of $5,640/metric ton overnight after falling through its YTD low of $5,725/mt on Friday, triggered by Pres. Trump's imposition of more tariffs on Chinese goods effective Sept. 1.
In pre-market trade: FCX -2.7%.
Copper has been used as a proxy for trading the on-off U.S.-China trade talks, and funds had amassed significant short positions on copper even before Friday's fall amid a deterioration in global manufacturing activity as shown by various falling purchasing managers indexes around the world.
The metal markets are particularly sensitive to the health of China's industrial economy, which is struggling, as both the official and Caixin PMI indexes edged up in July but remained below the expansion-contraction threshold; in the euro zone, manufacturing activity has shrunk from bad to worse, contracting at the fastest pace in July since late 2012.
LME aluminum, zinc, lead and tin all now trade below beginning of the year levels; only nickel is defying the trend, as investors bet on rising demand from the electric vehicle battery sector.
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