A few weeks ago, fellow Metal Bulletin columnist Martin Hayes wrote about the dramatic fall in the prices of financial assets since the turn of the year. Stock markets across the world have given back some of what some would call frothy gains - claimed as policy vindication by the US president - and London Metal Exchange metals prices also fell, at times during that period quite sharply. I’m not sure that I am as sanguine as Martin about the effect of algorithmic and high-frequency trading (HFT) and their role in that sell-off.
On the LME market, there are effectively two sorts of influences on price movement: fundamental and technical trading. On the fundamental side are hedgers (who are generally not particularly price sensitive - if they are genuinely hedging) and those whose approach to the market is determined broadly by the forces of physical supply and demand. The technical operators...
