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Asian Stocks Decline Amid Rising Oil Prices and Fed Hike Bets
Confirmed
In Short: Asian stocks fell on Friday, driven by surging oil prices and bets on a Federal Reserve rate hike, according to reports.
The White House's copper tariff plan has stalled amid affordability concerns, according to two people familiar with the matter, leading to a 4.6% drop in US copper prices, according to Crude Oil Prices Today | OilPrice.com.
Crude oil prices reached their highest level on May 21, driven by increasing attacks along key shipping routes in the Middle East and the US-Iran standoff, which restricted shipping traffic through the Strait of Hormuz.
This rise in oil prices has fueled inflation worries and dented investors' appetite for riskier assets, prompting traders to add to bets on a Federal Reserve rate hike next week, according to reports.
A hot US PPI print and a hawkish-sounding Christine Lagarde both point to the possibility of a global central bank rate hike cycle, which does not support risk assets, according to Joe Brusuelas, chief economist at RSM US.
What's confirmed
- The White House's copper tariff plan has stalled amid affordability concerns, according to two people familiar with the matter, leading to a 4.6% drop in US copper prices, according to Crude Oil Prices Today | OilPrice.com.
- Crude oil prices reached their highest level on May 21, driven by increasing attacks along key shipping routes in the Middle East and the US-Iran standoff, which restricted shipping traffic through the Strait of Hormuz.
- This rise in oil prices has fueled inflation worries and dented investors' appetite for riskier assets, prompting traders to add to bets on a Federal Reserve rate hike next week, according to reports.
- A hot US PPI print and a hawkish-sounding Christine Lagarde both point to the possibility of a global central bank rate hike cycle, which does not support risk assets, according to Joe Brusuelas, chief economist at RSM US.
What's still developing
- The White House has not yet made a decision on refined copper tariffs as officials juggle concerns that higher prices for the red metal could raise manufacturing costs against the potential benefits of encouraging more domestic mining, according to two people familiar with the matter.
- The report is unwinding the tariff trade risk premium, with US copper prices sinking 4.6%.
- Inflation driven majority by Energy not metals (See Hot China CPI/PPI this week was majority energy).
- Copper future and related stocks plunged on Thursday morning after a Reuters report said that the White House's "copper tariff plan stalls amid affordability concerns." The Trump administration has yet to decide whether to impose tariffs on refined copper, sending copper prices around the world to record highs this summer as physical copper flooded US warehouses.
- Ero Copper declined 8.6%, Capstone Copper lost 8.2% and First Quantum Minerals retreated 6.4%.
- Cost inflation has driven incentive prices higher and a big chunk of the copper move is mine supply issues, scrap tightness.
- Meanwhile, US President Donald Trump said that the Iran war will likely continue until after the November midterm elections, keeping geopolitical risk premium in play and supporting oil prices.
- This might continue to fuel energy-driven inflation worries and weigh on investors' sentiment.