World Street | Copper in a crunch; cash flight from China market; more glitter for gold;

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In throes of economic shifts and geopolitical tensions, global markets seem to be grappling with disruptions, as it enters a new year. Copper processing cuts in China hint at a supply squeeze, while foreign funds flee China’s market amid scepticism about its economic revival. Amid predictions of gold’s January rise and the slump in nickel, the US electric vehicle market faces hurdles, reflecting in slashed prices. China’s factory activity shrinks to the lowest level in six months in December. Surprising Europe, Denmark’s Queen Margrethe II announces her abdication. All these and more in this edition of World Street.

Copper crunch

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China’s top copper smelters have cut Q1 guidance for copper concentrate processing treatment and refining charges (TC/RCs) by 16 percent as mine closures and disruptions tighten the supply outlook, Reuters reports. With Panama closing First Quantum’s Cobre mine and Anglo American lowering copper production guidance for 2024, the global copper ore and concentrate market is expected to be in deficit by around 170,000 tons in 2024.

Underweight China

Nearly nine-tenths of the foreign money that flowed into China’s stock market in 2023 has already left, as global fund managers are doubtful about Beijing’s seriousness to revive the economy, reports The Financial Times. A survey of Asia-focused fund managers by Bank of America conducted this month showed a majority were underweight Chinese shares — unchanged from November.

Jan shine for gold

Gold tends to perform well in the first month of the year, according to analysis by the World Gold Council. Since 2000, gold has gained in 70 percent of Januaries. With expectations running high that the Fed may cut rates sooner than expected, some investors may consider increasing exposure to gold, reports

Of nickels and dimes

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Nickel has been the worst performer among metals in 2023, and might not see a reprieve anytime soon, reports Bloomberg. Metals have been pressured throughout this year by global economic headwinds and uncertainty over China’s growth outlook, but nickel in particular has been hit hard by a double whammy of oversupply and weak demand.

Slow charging

Electric-vehicle sales growth hit a speed bump in the US in 2023, causing many auto companies to cut back on their EV plans, reports WSJ. Automakers are offering a combination of discounts and lower interest-rate deals in an attempt to draw in buyers, leading to a sharp decline in new EV prices and an even steeper decline for their counterparts in the used-vehicle market.

Cheering the Fed

Eighty-eight percent of the 300 investors, traders and money managers surveyed by CNBC’s Delivering Alpha poll expect the Fed to start interest rates in the second quarter of 2024. Eighty-eight percent of the respondents gave the Fed an excellent or good score for 2023, up from the 77 percent three months ago.

Home sweet home

The rate on the 30-year fixed mortgage in the US declined to 6.61 percent from 6.67 percent last week, according to data by Freddie Mac. Rates fell for the ninth consecutive week. Overall, rates have fallen over a full point from 7.79 percent in October.

Solid year ahead!

Thomas Lee, managing partner and the head of research at Fundstrat Global Advisors, who had the most accurate call of the market for 2023, is again expecting a solid year ahead for the stock market in 2024, reports Business Insider. He has forecast a target of 5200 for S&P 500, driven by easing financial conditions and expansion of price-to-earnings multiples.

China’s factory blues

China’s factory activity shrank in December to the lowest level in six months. The fall suggests that the world’s second-biggest economy may need more policy support to accomplish Beijing’s economic stabilisation goals in 2024. The official manufacturing purchasing managers index declined to 49. The National Bureau of Statistics attributes this decline to a challenging external environment, emphasizing heightened complexity and uncertainty. This downturn indicates a possible need for added policy support to sustain China’s economic trajectory.

Red Sea ruckus

AP Moller-Maersk A/S ceased Red Sea transit following a Houthi rebel attack on one of its vessels, intensifying tensions in the critical water passage. The global container giant is pausing all Red Sea transit for 48 hours to evaluate security. The US Navy reported being fired upon while aiding Maersk Hangzhou, resulting in three Houthi boats sunk and crew casualties.

Succession surprise

Europe’s lengthiest-reigning monarch, Denmark’s Queen Margrethe II, is set to abdicate on January 14 after a remarkable 52-year reign. Her eldest son, Crown Prince Frederik, will succeed her. The 83-year-old queen, who assumed the throne in 1972, unexpectedly disclosed her decision during her annual New Year Eve address, attributing her contemplation of the future to a successful back surgery earlier in the year. She said, “The surgery naturally led me to contemplate the future – whether it was time to entrust responsibility to the next generation.”

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