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TOCOM rubber hits 4-month low on risk-adverse mode, weak US auto sales

TOKYO (April 4): Benchmark Tokyo rubber futures plunged to their four-month low on Tuesday amid stronger risk-adverse mode, which boosted a safe-heaven yen against the dollar, and as weaker-than-expected US auto sales weighed on market sentiment.

Investor appetite for risk has been dulled this week by factors including nerves ahead of an upcoming meeting between US President Donald Trump and Chinese President Xi Jinping and a suspected suicide bombing in St. Petersburg, Russia, on Monday.

“Selling pressure increased as risk aversion spread through wider markets,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

The Japanese yen gained broadly on Tuesday as investors flocked to the safe-haven currency. A stronger yen makes yen-denominated assets less affordable when purchased in other currencies.

The Tokyo Commodity Exchange (TOCOM) rubber contract for September delivery finished down 8.3 yen, or 3.4%, at 236.7 yen (US$2.14) per kg. Earlier in the session, it touched 231.0 yen, lowest since Dec 2.

In a further blow to the rubber market, major US automakers’ sales figures for March came in below market expectations and gave early evidence that America’s long, robust boom cycle for car sales may finally be losing steam.

China’s stock, bond, foreign exchange and commodity futures markets are closed on April 3 and 4 for the Ching Ming Festival holiday. Markets will resume trade on April 5.

“Shanghai investors are expected to come back with bearish sentiment if not in wait-and-see mode ahead of the Trump-Jinping meeting,” Kikukawa said.

The front-month rubber contract on Singapore’s SICOM exchange for May delivery last traded at 178.8 US cents per kg, down 4.0 US cents.

(US$1 = 110.4900 yen)

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