LME copper prices surged during the Qingming Festival, summary of overseas macro news during the festival [SMM analysis]

During the suspension of trading by the Shanghai Futures Exchange for Chinese Qingming Festival, there were large changes in the LME market. During the closure of the SHFE on the evening of April 3, LME copper suddenly surged from US$9,000/ton to around US$9,350/ton, reaching a high of US$9,390.5/ton, once again setting a new high since January 2023, and continued to run at a high level in the next two days. Why? The following is a summary of news during the holidays:

On Wednesday evening (April 4), the United States announced that the number of new ADP jobs in March was 184,000, up from 155,000 in the previous month, far exceeding market expectations. According to the CMEfedwatch tool that night, the probability of the Federal Reserve keeping interest rates unchanged in May has reached 95.2%, and the probability of a rate cut in June has also been lowered to around 50.8%. The substantial increase in non-farm payrolls and the continued recovery of the PMI both indicate that the United States is maintaining smooth capital flow while steadily shrinking its balance sheet. The US dollar fell from its high that night, and copper surged to a high of $9,300 per ton in late that night. On Thursday (Apr 5), PMI data from many European countries showed a warming trend. On Friday (Apr 6), the US unemployment rate in March was 3.8%, falling more than market expectations. The seasonally adjusted non-farm payrolls in March increased by 303,000. U.S. Treasury Secretary Janet Yellen visited China this week, and the talks between China and the United States continued to send signals that the two countries will strengthen cooperation and achieve mutual benefit and win-win results. Encouraged by this, the overall market rose during the week, which also provided certain support for the copper futures to surge. On the fundamentals, according to data from the National Bureau of Statistics, China's copper concentrate production was 259,697 tons as of February , a year-on-year decrease of 8.79%. In February, China imported 2.2089 million tons of copper ore and copper concentrate, a year-on-year decrease of 3.2%.

Since Japan ended the era of negative interest rates, overseas markets have generally released signals of monetary easing. But on the other hand, the growth of safe-haven assets such as gold also shows that factors such as the deterioration of the geopolitical situation are still fermenting and the market's investment risk appetite is also shrinking. Copper futures broke through the previous support level again due to factors such as the decline of the US dollar, which may continue to have an impact on downstream consumption in the short term.