TOKYO (March 14): Benchmark Tokyo rubber futures climbed on Monday, snapping four days of losses as bargain hunting emerged, buoyed by a firmer Tokyo stock market, though gains were capped as caution remained ahead of policy decisions by key central banks.
The Tokyo Commodity Exchange (TOCOM) rubber contract for August delivery finished 2.7 yen, or 1.6%, higher at 171.6 yen (US$1.51) per kg, after rising to a high of 173.5 yen in early trade.
The TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, rose sharply early this month, aided by export cuts from top Asian producers and firmer oil prices.
However, the market fell more than 3% last week as China’s sluggish trade data re-ignited worries over its economic growth in the world’s top consumer.
“Traders were hesitant to take fresh positions ahead of policy clues from central banks,” said Satoru Yoshida, commodity analyst at Rakuten Securities, pointing to policy decisions by the Bank of Japan on Tuesday, the U.S. Federal Reserve on Wednesday and the Bank of England on Thursday.
“I don’t think investors are expecting anything drastic from the BOJ, especially given the fact that they are meeting before the FOMC and will be reticent about making a big aggressive gamble ahead of a Fed meeting,” said Stefan Worrall, director of Japan equity sales at Credit Suisse.
Japan’s Nikkei stock index added 1.7%, buoyed by gains on Wall Street last Friday, as well as glimmers of strength in weekend data from China.
China data on Saturday showed further weakness in much of the economy, but also contained a few bright spots.
The dollar was nearly flat at 113.93 yen having gained 0.6% on Friday. An improvement in risk appetite on the back of rising equities and crude oil had lifted the greenback from a low of 112.225 to as high as 114.45 versus the safe-haven yen last week.
“The TOCOM may need a set of fresh positive news to move and stay above 175 yen, a technical ceiling of last October and December,” Rakuten Securities’ Yoshida said.
The most-active rubber contract on the Shanghai futures exchange for May delivery fell 25 yuan to finish at 11,270 yuan (US$1,735) per tonne.
The front-month rubber contract on Singapore’s SICOM exchange for April delivery last traded at 122.0 U.S. cents per kg, down 2.9 cent.
(US$1 = 6.4944 Chinese yuan)
(US$1 = 113.8000 yen)
