In copper’s express trip to record highs, someone got left behind at the station: China. Chinese industrial demand has been so integral to copper prices that the metal and the Chinese stock market have been closely correlated for the past few years – and all but joined at the hip since early 2010. Wherever the Shanghai-Shenzhen 300 index went, copper went right along with it, and vice versa.But as copper has forged new highs in late 2010 and into the New Year, that relationship has fallen apart. The Shenzhen is off 13 per cent from its November highs, at the same time as copper has risen another 10 per cent.
On the surface, it looks like one of these indicators is wrong. But perhaps the two markets are just looking at different things now. And maybe, one market expert says, it was the U.S. Federal Reserve Board that caused them to look in different directions.
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