Five things to watch in markets in the week ahead
- Copper prices are rebounding strongly along with risk after Friday’s tariff-induced plunge.
- Supply disruptions and strong Chinese demand continue to support prices.
- Technical indicators point to further upside for copper.
- Looking for actionable trade ideas to navigate the current market volatility? Subscribe here to unlock access to InvestingPro’s AI-selected stock winners.
Following Friday’s sharp sell-off, there was relief across financial markets today thanks to some soothing words from Trump, triggering the so-called “TACO trade.” Beijing, for its part, urged Washington to dial down the tariff threats and return to the negotiating table to iron out their lingering trade disputes.
It remains to be seen how things will evolve in the coming days, but there’s still ample room for posturing and brinkmanship before November 10 rolls around, when the trade truce was set to expire between the world’s two largest economies.
Copper prices fell around a huge 5% on Friday, but now a big chunk of those losses is made good. As well as receding fears of another trade war, we also had strong Chinese import data to imply strong demand for copper. Meanwhile, the government shutdown drags on with little sign of resolution.
With US data releases drying up, attention now turns to the central bankers gathering for the IMF’s autumn meetings, where Fed Chair Jerome Powell is due to speak tomorrow.
Tightness in the Copper Market
Copper is highly sensitive to supply issues, and that’s been one of the main drivers of recent price strength. The ongoing disruptions at Indonesia’s Grasberg mine, the world’s second-largest, have added to bullish momentum. Operator Freeport-McMoran (NYSE:FCX) declared force majeure a couple of weeks ago after mud flooded underground tunnels, tragically resulting in fatalities and forcing a major cut in production guidance.
Reports of production disruptions elsewhere around the world have also been highlighted recently, including in Chile and Congo. Accordingly, the International Copper Study Group (ICSG) has said it expects the global refined copper market to swing to a deficit of 150,000 metric tons in 2026 from the previously expected surplus of 209,000 tons, all due to slower production growth.
At the same time, demand remains red hot for copper, as indicated, for example, by the latest trade data from China released overnight.
China’s total imports unexpectedly surged to a 17-month high, accelerating to 7.4% y/y, up from 1.3% in August, with exports also beating expectations. This came as a surprise, given the recent signs of softness in domestic demand. Commodities imports were particularly strong, with iron ore rising 13.4% y/y and copper surging 24.4% y/y.
Imports of many other categories were also strong, but the impact of the US-China trade spat could be seen in the data as imports from the US slumped to -16.1% y/y in September. The September data were encouraging, in particular for commodities and copper demand.
Over the long term, the copper story remains bullish. As the world accelerates towards electrification, i.e., replacing fossil fuel systems with electric alternatives, copper demand is set to soar. Electric vehicles are the most visible driver of this trend, but the metal’s role extends far beyond transportation.
From renewable energy grids to construction and plumbing, copper is essential to the infrastructure of a cleaner, more efficient world. With demand expected to outpace supply growth in the years ahead, the long-term outlook continues to shine bright for copper.
Against this backdrop, dip-buying remains my preferred trading strategy on copper.
Key Levels and Trade Ideas on Copper
Ignoring Friday’s headline-driven drop, copper prices have been climbing steadily over the past couple of months, kicking off October on a strong note after the sharp drop in late July. That decline came when former President Trump unexpectedly excluded raw copper materials—like ore and refined copper—from new tariffs.
From a technical standpoint, copper’s setup looks constructive again – with prices recouping most of Friday’s big drop quickly. A daily close around current levels or higher could see the bullish trend accelerate. Indeed, the trend is bullish with the 21-day exponential moving average recently crossing back above the 200-day simple average. For many traders, buying the dips remains the preferred strategy in this kind of trading environment.
Support now lies around the key $5.000 level—a major psychological and technical zone that temporarily gave way during Friday’s quick plunge. As long as prices hold above this point, the path of least resistance remains to the upside. Below this, 4.850 is the next support, then the 200-day average at 4.743.
The next key levels to watch are 5.261, marking last week’s high, where I am expecting lots of stop orders to be resting. Should we get there, then copper could extend its climb towards the next potential resistances at $5.425 and $5.555, with a potential run towards the next round-number target of $6.000 if momentum continues.
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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.