Japanese rubber futures trimmed gains and fell to a three-week low on Tuesday as the yen staged a recovery and crude oil prices fell.
The Osaka Exchange (OSE) rubber contract for April delivery was down 7.6 yen, or 2.8%, at 261 yen ($1.74) per kg at closing. The rubber contract on the Shanghai futures exchange (SHFE) for January delivery was down 255 yuan, or 1.7%, at 14,080 yuan ($1,952.55) per metric ton. The Japanese yen rose more than 0.5% to its strongest in seven weeks at 147.5 per dollar on Tuesday. A stronger yen makes assets denominated by the currency less affordable for overseas buyers. Oil futures fell on Tuesday, reversing the previous day’s rally, as concerns over weaker demand amid a slowing global economy outweighed the prospect of deepening supply cuts by OPEC and its allies such as Russia. Natural rubber often takes direction from oil prices as it competes for market share with synthetic rubber, which is made from crude oil. In Japan, global inflationary forces are finally seeping into the economy after decades of falling prices, forcing investors to radically rethink their Japan bets as the Bank of Japan considers a major policy shift.
Japan’s benchmark Nikkei average closed 0.1% lower. Asian shares climbed to fresh two-month highs on Tuesday, taking cues from a rally on Wall Street, while the dollar languished near its lowest in two-and-a-half months on expectations the US Federal Reserve is likely done with interest rate hikes.
The front-month rubber contract on Singapore Exchange’s SICOM platform for December delivery last traded at 148.3 US cents per kg, down 0.7%.
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