Copper ticks higher as Fed rate hike bets fade

Copper prices climbed for a second consecutive day on Monday, mirroring gains in equities as the likelihood of a US Federal Reserve rate hike in October diminished, according to research head Sandeep Daga of Metal Intelligence Centre. The benchmark three-month copper on the London Metal Exchange increased by 0.6%, reaching $14,346 per metric ton as of 0951 GMT.

Copper experienced a record high of $14,875 on September 10 due to concerns about tight supplies outside the US, but it has since declined. The pan-European STOXX 600 rose 0.2% after reaching a four-month low last week, driven by surging global bond yields resulting from inflation, increased corporate bond issuance, and unfavorable fiscal outlooks.

Meanwhile, Japan's Nikkei share average achieved a three-month closing high. The probability of an October US rate hike decreased after weaker-than-expected US jobs data last week, with rate traders now forecasting an 18% chance of a hike at this month's Fed meeting, as opposed to the 71% chance a week ago. Higher interest rates can curb economic activity and dampen demand for growth-dependent industrial metals such as copper.

The US dollar reached a near-17-month peak against the euro, which can negatively impact greenback-denominated metals by raising their price for non-dollar currency buyers. The market is eagerly awaiting the return of China, its largest consumer of metals, on Thursday to assess fourth-quarter purchasing activity. Domestic demand in China seemed weak, as Chinese copper inventories were thin, and smelter maintenance suspensions were in place.

The cash LME copper contract was trading at a nearly $63 premium per ton over the three-month forward, up from $53.50 on Friday, indicating a tightening in near-term supply. Aluminum prices rebounded to trade up 0.4% at $3,111.50 a ton, after touching a five-day low, while zinc dipped 0.1% to $3,708, lead increased 0.8% to $1,865.50, nickel rose 0.5% to $15,700, and tin gained 0.4% to $54,190.