Zinc Slumps as Fed Tightening Specter Sinks Metals and Minersby
Teck and Freeport pace weekly declines by mining companies
St. Louis Fed chief joins chorus on possible April tightening
Zinc paced industrial-metal declines as falling U.S. durable goods orders dimmed demand prospects and a Federal Open Markets Committee member said interest rates may have to be increased faster.
Mining shares headed for the biggest weekly decline since January, with Teck Resources Ltd. and Freeport-McMoRan Inc. each losing more than 10 percent. The dollar extended a rally amid renewed expectations for tightening, making greenback-denominated commodities more expensive for foreign buyers. On Wednesday, Federal Reserve Bank of St. Louis President James Bullard joined a growing chorus of policy makers emphasizing rates may rise as soon as April.
“The U.S. had a pretty lousy durable goods number,” Bart Melek, an analyst at Toronto-Dominion Bank, said by telephone. “At a time where the market is telling you the Fed may be tightening, this could be a negative for global growth, I might need less zinc.”
Zinc, used to keep steel from rusting, fell for a third day, sliding 2.1 percent to $1,798 a metric ton at 12:45 p.m. in New York. The metal gained 2.3 percent last week.
Orders for durable goods in the U.S. fell in February for the third time in four months, reflecting a broad-based slowdown that underscores lingering softness in U.S. capital investment.
Bookings for goods and materials meant to last at least three years declined 2.8 percent after a 4.2 percent gain that was less the previously reported, Commerce Department data showed Thursday. Bookings for non-military capital goods excluding aircraft dropped 1.8 percent, more than estimated.
Lead, copper, tin and nickel also retreated. Aluminum was little changed.
Metal and mining stocks pared losses as some investors questioned the hawkish interpretation of policy maker comments and better-than-forecast U.S. jobs data eased concern over slowing global commodities demand.
“The market doesn’t know how to interpret the hawkishness,” Frank Cholly, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “You can justify your opinion either way with that hawkishness.”