TOKYO (Aug 15): Benchmark Tokyo rubber futures hit a three-week high on Monday, reversing earlier losses, as investors rewound short positions after a jump in China shares and gains in Shanghai rubber futures helped improve sentiment, which was earlier hurt by a higher yen.
“Strong China’s equities and Shanghai rubber futures lent psychological support to the TOCOM in thin trade with many traders and investors on summer holiday,” said a Tokyo-based dealer.
The Tokyo Commodity Exchange (TOCOM) rubber contract for January delivery <0#2JRU:> ended up 0.7 yen, or 0.4%, at 158.9 yen (US$1.57) per kg. Earlier in the session, it hit a high of 159.5 yen, the highest since July 25.
The TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, earlier slid to as low as 156.2 yen on a softer yen, but they shed early losses after Shanghai futures regained ground.
China stocks jumped to their highest in more than seven months on Monday, led by property and financial shares, as investors bet that disappointing economic data for July would prod Beijing to unleash fresh stimulus.
The most-active rubber contract on the Shanghai futures exchange for January delivery rose 265 yuan to finish at 13,140 yuan (US$1,978.59) per tonne.
The US dollar was down 0.2% at 101.12 yen after losing 0.6% on Friday, pegged back by sluggish US data that tempered expectations of a Federal Reserve interest rate hike this year.
“It seems there were also some technical buying with expectations that the benchmark could move above the recent high of 159.3 yen,” the dealer said, adding that the market will likely stay in a bullish tone through the middle of September.
The front-month rubber contract on Singapore’s SICOM exchange for September delivery last traded at 132.7 US cents per kg, down 0.2 cent.
(US$1 = 101.1100 yen)
(US$1 = 6.6411 Chinese yuan)