TOKYO (Jan 7): Benchmark Tokyo rubber futures rebounded on Thursday, snapping a 3-day losing streak, as investors covered short positions after the prices had dropped to fresh 7-year lows, but tumbling Shanghai stock prices and weaker oil prices capped gains.
The Tokyo Commodity Exchange rubber contract for June delivery finished 0.6 yen higher at 148.8 yen (US$1.27) per kg. It earlier slid to 146.2 yen, the lowest since March 23, 2009.
“Investors wanted to unwind short positions, as they saw a risk of sharp rebound in slumping oil prices and as the rubber prices have been overshot,” said Hiroyuki Kikukawa, general manager at Nihon Unicom Inc.
“But no one was willing to take large fresh buys as a plunge in Shanghai and Tokyo stock markets,” he said.
Asian stocks slid across the board on Thursday, after China again guided the yuan sharply lower while Shanghai shares tanked more than 7% and triggered a stock market circuit breaker for the second time this week.
Japanese stocks also tumbled for a fourth day, after China’s central bank weakened the yuan — sparking a sharp strengthening of the yen and rattling investors already on edge over geopolitical tensions.
Oil prices tumbled over 5% to levels not seen since the early 2000s on Thursday, as a sliding yuan and a second emergency halt in China’s stock trading this week left Asian markets in turmoil.
“I don’t think the TOCOM prices have hit the bottom yet, as bearish sentiment has spread to all over,” Kikukawa said.
But investors are expected to unwind short positions further on Friday, ahead of the U.S. job data and a 3-day weekend in Japan, he added.
The U.S. government’s nonfarm payroll report is due on Friday.
Japanese financial markets will be closed on Monday, due to a national holiday.
The most-active rubber contract on the Shanghai futures exchange for May delivery declined 50 yuan to finish at 10,080 yuan (US$1,529.85) per tonne.
The front-month rubber contract on Singapore’s SICOM exchange for February delivery last traded at 106.7 U.S. cents per kg, down 2.5 cent.
(US$1 = 6.5889 Chinese yuan renminbi)
(US$1 = 117.5900 yen)
