Copper Vulnerable on AI Skepticism & Growth Scare
Copper Analysis
Copper surged to record highs in May due a market tightening and demand optimism fueled by the AI boom, since the metal is heavily used in the semiconductor industry. However the AI euphoria gave way to fears of a bubble and the latest earnings from Big Tech failed to assuage those concerns. Markets were also grappled by a growth scare following the soft employment report form the US. At the same time, the situation in China remains disappointing, with weak factory activity, distressed property market and cautious consumers.
These factors have compounded the reversal from the record peak, with Copper reaching five month lows last week. The slump brings the 2024 lows in the spotlight (3.652) but we are cautious around sustained weakness.
Despite concern around the viability of the AI rally, the semiconductor market is still set to expand this year. Fears over US recession appear stretched and the Fed has ample room for cuts if needed, while China's recovery may be bumpy, but authorities have been stepping up their stimulus efforts.
Copper finds support this week and has the opportunity to challenge the EMA200 (black line). Daily closes above it would pause the bearish bias, but the upside contains multiple hurdles.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
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