Copper Erases Gains as Fed Easing in Doubt After US Jobs Data

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(Bloomberg) — Copper erased gains as traders cast doubt on a December rate cut by the Federal Reserve following a mixed US jobs report.

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US job growth picked up in September following a decline in the prior month, and the unemployment rate rose to an almost four-year high of 4.4%, underscoring a number of cross-currents in a fragile labor market. Nonfarm payrolls increased 119,000 after the prior month was revised lower.

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The dated snapshot likely doesn’t change much for Fed officials seeking to tamp down inflation and support the labor market, many of whom were already leaning away from cutting interest rates again next month. While they slightly increased wagers on a December cut after the economic reading, swap traders still see a less-than-50% chance of a rate reduction next month. Prior to the data, the traders had priced out further easing by the US central bank after the government cancelled the publication of the October employment report.

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Easy money typically benefits industrial metals such as copper. 

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The red metal was boosted earlier by news that Beijing is considering measures to turn around China’s struggling property market, after a years-long slump that’s dented commodities demand.

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A slew of options from mortgage subsidies to tax rebates and lower transaction costs are being considered by policymakers, according to people familiar with the matter. 

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The poor state of China’s housing market has dented construction activity and weighed on domestic metals demand, though other sectors from new-energy products to power-grid investments have picked up some of the slack. As the busy period for Chinese manufacturing draws to a close, copper consumption has largely disappointed, with run rates at fabricators plumbing multiyear lows for the season.

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Beijing’s latest property plan has been under discussion since at least the third quarter, as the slump in housing markets deepened, the people said. Previous efforts to step up support have largely lost momentum, and home sales have been falling since the second quarter.

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Copper slipped 0.1% to settle at $10,738.50 a metric ton on the London Metal Exchange. Copper traded on New York’s Comex dropped 0.9% to settle at $5.0485 a pound, the lowest since Nov. 7. Other LME metals were mixed, with zinc up 1.2% while nickel falling 1%. 

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—With assistance from Katharine Gemmell and Mark Burton.

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