Metals Producers Slump as Dollar Strengthens
Recent surge in the dollar affects metals and raw materials producers. Chinese demand slowdown, doubts about rate increases, Russian wheat production, and Galileo Resources' joint venture explored.
The recent surge in the dollar has taken a toll on producers of metals and other raw materials. The strengthening currency, coupled with extended cutbacks in oil production from Saudi Arabia and Russia, has triggered fears that these nations are anticipating a prolonged slowdown in Chinese demand.
Adding to the dollar's strength are doubts surrounding more significant rate increases from the Federal Reserve. While Chairman Jerome Powell and others continue to warn that the rate-hike cycle is not yet complete, one strategist believes the prospects for these increases are low. J.D. Joyce, president of Houston financial advisory Joyce Wealth Management, explains that much of the Fed's talk is merely "bulling from the pulpit." He points out that if the Fed were to declare an end to the rate increases, it could have unintended consequences.
On a different note, Russian wheat production is expected to reach record levels. This positive outlook for wheat exports may further contribute to the strength of the dollar. Conversely, extreme heat conditions in the United States are likely to weigh on supplies, potentially exacerbating the situation.
In more positive news, Galileo Resources shares experienced a rally after the mining company announced its new joint venture with Cooperlemon Consultancy. This partnership will focus on copper exploration in Zambia, signaling potential growth opportunities for both entities.