Copper futures in Shanghai fell by their daily limit after central banks in Asia and Europe raised interest rates to curb inflation , threatening to slow economic growth and demand for commodities. Aluminum also dropped.
The European Central Bank , the Reserve Bank of India , the Bank of Korea and the Reserve Bank of South Africa increased benchmark rates yesterday, sending copper down in London and New York. The slump may signal the end of a five-year commodity rally fuelled by demand from China and increased investment by hedge and pension funds.
“The rate increases will slow down economic growth,” said Li Rong, copper analyst at Great Wall Futures Co., by phone from Shanghai today. “Copper has been declining from records since mid-May on expectations of such rate increases.”