For months, markets have been dancing to central bankers' tune, but that may now be changing, writes James Saft. Full Article
Confused while buying stocks? Get buy, sell or hold recommendations from VantageTrade. Full Coverage
Copper gains on Spain relief, ends quarter up 7 percent
LONDON (Reuters) - Copper rose on Friday, on track for a gain of more than 7 percent this quarter, after debt-laden Spain unveiled a budget that reassured investors the euro zone crisis had inched closer to resolution.
Spain's detailed timetable for economic reforms and spending cuts drove both commodities and equities higher.
And following new monetary stimulus unveiled by the United States and Japan this month, markets expect China to cut interest rates to spur growth, as weakening demand in China has damaged global economies and weighed on investor sentiment.
"The combination of Chinese fiscal stimulus, Federal Reserve unlimited quantitative easing and possible resolution in Europe is a very positive mix for base metals," Guy Wolf, macro strategist at Marex Spectron, said.
"We expect significant fund flow into commodities over the quarter end and a positive Q4 performance."
Three-month copper on the London Metal Exchange rose 0.8 percent to $8,238 a metric tonne by 1431 GMT, extending gains from the previous session when it edged up 0.7 percent. Prices hit their lowest in two weeks at $8,082 a tonne on Wednesday.
While copper was on track to post a 7.2 percent rise this quarter, after falling 9 percent in the previous one, it is still down 0.5 percent this week.
Copper held on to gains even after the euro reversed direction and weakened against the dollar. A stronger dollar versus the euro makes metal priced in the unit more expensive for Europe investors.
Volatility was likely to persist as the positive impact of stimulus activity fought the dampening impact of weak economies, analyst Edward Meir at INTL FCStone said.
"The tug-of-war between these two countervailing camps will likely go on for some time, but we suspect that even if Europe settles down, macro variables will eventually tip the markets in a more southerly direction," Meir said in a note.
Signs of slowing global growth persisted in Asia, where South Korea's industrial output contracted for the third consecutive month, while Japan's industrial output fell more than expected in August.
In China, the world's top consumer of metals, final September figures for the private sector HSBC manufacturing report will be released on Saturday, followed by a National Bureau of Statistics report on Monday.
Bonded copper stocks in Shanghai's customs cleared zones are again on the rise, several traders said, with inventory held by a large warehouse eclipsing record peaks seen at the start of the year.
Total copper stocks held in Shanghai were sitting around 650,000 metric tonnes (716,502 tons), according to several traders with operations in Shanghai, up from around 620,000 tonnes at the start of August.
"Short-term copper is going to have another little test on the upside, but I find it very difficult to get bullish on copper at this point and I would look for that rally to fade fairly quickly," Standard Chartered analyst Dan Smith said.
China's markets will be shut from Oct 1 to 5, draining liquidity from the top metals consumer.
Tightness persisted in tin spreads as the premium of cash over the three-month contract hovered at $99 a tonne, down only slightly from $110 on Thursday and $120 on Tuesday, the strongest since February.
Stocks are low and one party holds 40-50 percent of combined inventories, cash and tomorrow positions, according to LME data.
Three-month tin climbed 1.9 percent to $21,600 a tonne.
In other metals, zinc added 1.3 percent to $2,110.25 a tonne, lead rose 0.4 percent to $2,280, aluminum gained 0.6 percent to $2,120 and nickel jogged 0.7 percent higher to $18,479.
(Editing by Alison Birrane)
- Tweet this
- Share this
- Digg this