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Investing.com -- Goldman Sachs Group Inc (NYSE:GS). recommended clients bet on rising U.S. copper prices just one day before President Donald Trump’s tariff decision sent the market plummeting by a record amount.
On Tuesday, Goldman’s salespeople advised hedge fund clients that Trump would likely implement a 50% tariff on copper, suggesting they purchase short-dated call options that would profit if U.S. copper prices increased by 11%, according to a a report from Bloomberg, citing people familiar with the matter who requested anonymity.
The prediction proved dramatically incorrect when on Wednesday afternoon, the president announced only limited tariffs that completely exempted the main traded form of copper. This decision triggered a 22% collapse in New York copper prices within hours - twice the size of the previous record drop in data extending back to 1988.
Following the market crash, Goldman’s commodity sales desk sent clients an email with the subject line "No copper tariff. Mea Culpa."
Multiple hedge funds and bank trading desks, including Goldman’s own, suffered losses from Wednesday’s price collapse, the report noted.
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