By Jim Williams
Copper is bucking the wider downward trend in metals and other commodities to start the week, rising on hopes that China’s economy is leveling out after another rate cut over the weekend.
China’s central bank cut lending rates on Saturday for the fourth time since November and trimmed the amount of cash that some banks must hold as reserves, stepping up efforts to support a slowing economy.
“In conjunction with the economic stimulus measures already implemented, this should lead to higher demand for metals in the medium term and shore up their prices,” Commerzbank said in a note.
Copper still faces nearer-term risks due to the expected seasonal summer slowdown and as the market remains in surplus, according to most estimates. Weak investor sentiment also poses a risk.
Global equities—seen by some as a substitute for growth—sold off, and the US dollar rose as investors digested news of capital controls in Greece and priced in an increased risk that Athens could default on its debt.
Jessica Fung, an analyst at BMO Capital Markets, told Financial Times, “The fact that copper is the only metal that is up indicates little conviction in demand upside [in China], and we believe copper could move down in line with other metals over the coming days.”
You can read the entire article here.
More on Greece debt crisis
The lines at the ATMs in Greece are around the corner as banks have been closed this week after talks between Greece and its creditors broke down. Up to 1,000 bank branches are expected to re-open Wednesday for limited transactions.
Reports say Greece is asking for a new two-year aid deal from the bailout mechanism for eurozone countries. If Greece fails to repay the International Monetary Fund (IMF) it risks leaving the euro.
Copper: Not out of the woods yet!
Here is an interesting article from MoneyControl.com: Master your Money. The author eloquently sums up the roller coaster ride copper has been on in 2015. She also looks ahead to the future. As the title suggests, investors may not see the forest for the trees as the red metal faces multiple challenges going forward.
7-part series: Breaking down the red metal
If you are just skimming this post, you may want to bookmark it and come back later for some of the best in-depth analysis we’ve found over the last couple of months. Author Mark O’Hara digs deep into copper in his seven-part series for the Market Realist. It doesn’t matter if you start with Part 1, or Part 6—the content is masterful and insightful.
Copper has been bouncing around the mid $2.60 range to start the week. A far cry from when the price topped out at almost $3.00 back in the middle of May.
Click here for current pricing.
Tagged with China, copper, economic, Greece, metal, metals, tED