Copper Price Outlook Bearish As Market Optimism Makes A U-Turn

At the start of Tuesday’s Wall Street trading session, stocks cautiously rose and were given a boost by positive Covid-19 related news. Pharmaceutical giants Pfizer and BioNTech received a “fast track” status from the Food and Drug Administration for two coronavirus vaccine candidates. The FDA approval expedites the regulatory review process before it is finally approved.

Despite this development, S&P 500 and Nasdaq indices closed 0.94 and 2.13 percent lower, respectively, while the Dow Jones narrowly rose a meager 0.04 percent. The benchmark S&P 500 index retreated shortly after it retested a critical inflection point at 3226.00. After it failure to puncture resistance, it quickly retreated as losses were accelerated after California Governor Gavin Newsome ordered a shutdown of all bars and indoor dining.

Crude oil fell along with a myriad of other soft commodities. The New Zealand Dollar was the session’s biggest FX loser right next to the British Pound. The Euro was the session’s champion and rose from what appears to be optimism about the friction-less implementation of a EUR750b aid package. EU leaders will be digitally convening to discuss it later in the week.

TUESDAY’S ASIA-PACIFIC TRADING SESSION

A relatively sparse data docket places the focus for traders on macro-fundamental themes like the coronavirus and Asian-based geopolitical risks. Beijing and Washington have each sanctioned lawmakers from each respective country in response to tension over the former’s passage of a sweeping national security bill in Hong Kong. Renewed US-China trade tensions also dampened risk appetite.

Combined with a pessimistic ending to Wall Street trade, Asia-Pacific stock markets may be in for a rough start. Commodity-linked currencies like the Australian and New Zealand Dollars along with emerging market FX are at risk while a premium may be put on the anti-risk Japanese Yen and haven-linked US Dollar. Brent may fall and could drag petroleum-linked currencies like the Canadian Dollar and Norwegian Krone with it.

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