SINGAPORE: Japanese rubber futures fell on Friday to post their first weekly loss in five weeks, as a lack of further fiscal stimulus from top consumer China weighed on sentiment, although a softer yen limited the decline.
The March Osaka Exchange (OSE) rubber contract closed down 11.1 yen, or 2.79%, at 386.4 yen ($2.60) per kg. The contract lost 3.35% for the week, posting its first weekly fall since the week ended Sept. 6. The January rubber contract on the Shanghai Futures Exchange (SHFE) fell 515 yuan, or 2.77%, to finish at 18,100 yuan ($2,558.05) per metric ton. The contract had dived more than 4% earlier in the session. It slid 6.19% for the week.
The current downtrend in natural rubber futures is largely driven by China’s “dramatic step back” from last week’s massive stimulus measures, said Jom Jacob, chief analyst at Indian analysis firm What Next Rubber.
Beijing said on Tuesday it was “fully confident” of achieving its full-year growth target but refrained from introducing stronger fiscal steps, disappointing investors who had banked on more policy support to get the economy back on track.
The market is now looking forward to a finance ministry press conference on Saturday for further fiscal stimulus announcements. China’s exports are likely to have risen at the slowest pace in five months in September, suggesting manufacturers are no longer rushing out orders ahead of tariffs and global demand for Chinese goods is softening. The dollar added 0.04% to 148.64 yen, inching back towards Thursday’s two-month high.
A weaker Japanese currency makes yen-denominated assets more affordable to overseas buyers. The front-month November rubber contract on Singapore Exchange’s SICOM platform last traded at 195.7 US cents per kg, up 1%.
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