Great commodity boom hits Chinese wall


What’s happening: Five major Chinese regulators announced on Monday that they had jointly convened key companies in the iron ore, steel, copper and aluminum sectors over the weekend. During the meeting, the agencies pledged to step up regulation and monitor commodity markets closely, warning that there would be “zero tolerance” for speculation or market manipulation.

Commodity prices fell in China on Monday after the news. Futures on iron ore fell 5.2%, while futures on rebar – a type of steel used to reinforce concrete – fell 3.6%.

Atilla Widnell, Managing Director of Navigate Commodities in Singapore, told me he sees this as a positive setback, as many everyday investors have gotten ahead of themselves.

“I think we are now getting closer to acceptable price ranges,” Widnell said. He noted that steel and iron prices had “gone up parabolically” but appeared detached from “underlying supply and demand fundamentals”.

Data for April showed that Chinese demand was “starting to stabilize a bit,” and that realistically, given the country’s relatively early exit from the severe pandemic restrictions and the roll-out of stimulus measures, “this year will not be magnificently stronger than last year ”.

Still, investor enthusiasm for commodities could pick up again shortly. US President Joe Biden wants to spend $ 1.7 trillion to renew the country’s infrastructure. And Goldman Sachs believes the case for rising oil prices “remains intact given the surge in demand for vaccines in the face of inelastic supply.”

The investment bank now expects prices for Brent, the global benchmark, to hit $ 80 a barrel this summer, from around $ 67 today.

Remember: Brent prices started the year below $ 52 a barrel. So even if traders take a break, the impact of significant price increases will remain a major topic of conversation.

A Deutsche Bank survey of 620 global market professionals released on Monday found that 63% of those polled see higher-than-expected inflation as one of the top three risks to market stability. That’s up from 43% in his April survey.

Bitcoin remains under pressure after huge crash

Regulatory measures in China are also fueling massive volatility in the cryptocurrency markets.

Chinese Vice Premier Liu He told a group of finance officials on Friday that the government would “crack down on bitcoin mining and trading” as part of its goal of financial stability. The government has not developed specific policies targeting mining or trade.

While China has taken steps to restrict the use of cryptocurrencies for years, the focus on mining is new. HashCow – which owns the world’s largest mining farms – said on Saturday it would stop selling machines to customers in China. Another Chinese mining company, BIT.TOP, has said it will no longer offer mining services to customers in mainland China.

These measures have fueled the recent sale of bitcoin and stocks in crypto-related companies. Bitcoin prices fell 13% on Sunday. The currency last traded at around $ 37,000 per coin – well below the high of $ 64,000 reached a month ago, according to CoinDesk.

Take a step back: The seismic correction in the crypto market price is not spreading to other parts of the financial system, at least for now. John Normand of JPMorgan thinks this has to do in part with who owns the digital currencies.

“It is true that flows to crypto have become more balanced between retail and institutional in recent quarters, increasing the risk of contagion,” he wrote in a recent research note. . “But institutional holdings are likely limited to a range of hedge funds rather than a more comprehensive range of asset managers, insurance companies, pension funds, central banks, sovereign wealth funds and commercial banks. / investment. “

That said: should what is going on in the bitcoin world be taken as an early warning that investors are experiencing a change in mood?

“It is possible that the crypto mania will provide a broader reading when it comes to more established markets because of the signaling effect it provides in terms of investor sentiment,” Richard McGuire and Lyn Graham told clients. -Taylor of Rabobank.

Virgin Galactic gets closer to sending tourists into space

Thinking of planning your trip again? Have you considered … space?

Richard branson Galactic Virgo (SPCE) is closer to sending wealthy tourists on extraordinary journeys. Over the weekend, his rocket-propelled plane carrying two pilots successfully climbed in the upper atmosphere.

The VSS Unity spaceplane reached an altitude of 55.45 miles, according to the company. The US government recognizes the 50 mile mark as the limit of space.

“It all worked out like a dream,” said Branson, who founded Virgin Galactic in 2004, in an interview with CNN.

What it means: The mission is great news for Virgin Galactic, which plans to start launching paying customers within the next year. The company’s last attempt at spaceflight came to an abrupt end when the plane’s rocket engine failed to ignite, delaying the company’s testing schedule.

Investor Insight: Shares of Virgin Galactic, which have struggled this year, have soared 18% in pre-market trading.

Virgin Galactic has already sold tickets for $ 200,000 to $ 250,000 to over 600 people. Branson said it “won’t be very long now” before he can get on board.


Lordstown Motors publishes its results before the US markets open.

Also today: the closing arguments in the successful trial between Apple (AAPL) and Epic, the creator of Fortnite.

Coming tomorrow: New data on US home sales and consumer confidence.

– Laura He and Michelle Toh contributed reporting.


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