Large stimulus measures from China in response to an escalation in the Sino-U.S. trade war would eventually drive metals prices higher, Wall Street bank Goldman Sachs said.
The trade war will affect China’s economy more than that of the United States, the bank said, but added that it expects Beijing will mostly be able to offset the negative impact.
“The more dif?cult the trade negotiation becomes, the more likely we think that credit will be kept easy by the government to ensure stable growth,” Goldman said in a note dated Wednesday.
Chinese stimulus measures have tended to bene?t metal-intensive sectors such as property and infrastructure. In this scenario market sentiment is likely to recover quickly and copper prices may return to the pre-selloff level of c$6,500 per tonne, the bank added.
Three-month copper on the London Metal Exchange fell to a 3-1/2 month low of $6,007.5 on Monday.
Source: Reuters (Reporting by Swati Verma and Diptendu Lahiri in Bengaluru; Editing by Kirsten Donovan)