TOKYO (Oct 3): Benchmark Tokyo rubber futures climbed for a second day on Tuesday, moving away from near two-month lows hit last week, as upbeat economic data from China, the world’s biggest buyer of the commodity, and higher stock prices fed appetite for risk.
“Healthy economic indicator from China, along with a lower yen and a Nikkei’s rally, helped improve risk appetite of investors,” said Satoru Yoshida, a commodity analyst with Rakuten Securities.
The Tokyo Commodity Exchange (TOCOM) rubber contract for March delivery finished 3.4 yen or 1.7% higher at 205.8 yen (US$1.82) per kg. It touched its lowest since Aug 2 last week.
China’s manufacturing activity grew at the fastest pace since 2012 in September, as factories cranked up output to take advantage of strong demand and high prices, easing worries of a slowdown before a key political meeting this month.
Japanese stocks rose more than 1% to hit two-year highs on Tuesday, tracking Wall Street’s rally after new data pointed to underlying strength in the U.S. economy, while a weaker yen also helped overall sentiment.
A measure of U.S. manufacturing activity surged to a near 13-1/2-year high in September, as disruptions to the supply chains caused by hurricanes Harvey and Irma resulted in factories taking longer to deliver goods and boosted raw material prices.
The dollar, which initially fell to 112.660 yen early in the session, was up 0.35% at 113.15 yen in late Asian trade. A rise above 113.260 would take the greenback to its highest since mid-July.
A weaker yen makes yen-denominated assets more affordable, when purchased in other currencies.
Trade in TOCOM rubber futures was thin however, as Chinese markets are shut this week due to a week-long National Day holiday that started on Sunday.
“With no lift in trading volume, usually triggered by Shanghai moves, we may see slow trade for the rest of the week, but the TOCOM seems to have hit a bottom at around the key 200-yen mark with multiple supporting factors,” Yoshida said.
The front-month rubber contract on Singapore’s SICOM exchange for November delivery last traded at 148.8 U.S. cents per kg, up 1.9 cent.
(US$1 = 113.0600 yen)
