FED: Base metals react positively, new price rally for iron ore?
FED: Base metals react positively, new price rally for iron ore?

2 November 2023 – Asian base metals have reacted positively to the US Federal Reserve’s interest rate pause. In addition, there are many indications that the Chinese government’s stimulus programmes are having an effect and that there could be a new price rally in iron ore beyond $130 per tonne. And in Ireland, industrial and logistics real estate is in hot demand due to robust economic growth.

Basis metals react positively to FED decision

The US Federal Reserve’s (FED) decision on 1 November to leave interest rates untouched at a high level was largely received positively by Asian markets and the base metals traded there.

The financial markets read into Governor Jerome Powell’s remarks that the Fed will now act more cautiously. Futures markets priced in an even higher probability than before that interest rates had peaked. US government bond yields fell to their lows for the day, whereas equity indices got a tailwind.

New iron ore price rally possible?

Iron ore prices had recovered significantly in the last five weeks and had climbed back above $120 per tonne. Currently, the trend seems to extend to well over $130 per tonne of iron ore, as the Chinese economy is increasingly recovering through various economic programmes.

Citibank sees the latest stimulus programmes of the Chinese government as a continuing support for the domestic economy. According to Citibank, this should allow the already existing upswing to gain further momentum and ensure a strong start in 2024.

Economy in Ireland continues to grow – industrial and logistics space in hot demand 

Despite all the challenges, the economy in Ireland continues to develop robustly and positively in 2023. According to analysts, the extreme double-digit growth now seems to have been replaced by a more sustainable development in the 3 to 4% range. The Irish Central Bank is also positive about the coming years and currently expects the inflation rate in the Eurozone to continue to settle down.

Industrial space scarce in Dublin

In the Irish capital Dublin, this trend is well illustrated by the growing demand for industrial and logistics real estate. In the third quarter alone, more than 60,000 square metres of space were newly let in Dublin alone and the vacancy rate fell to below 2%.

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