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SMM Morning Review - 2011/8/5 Copper Market
Aug 5,2011 09:44CST
smm insight
LME copper prices are expected to have weak support at USD 9,300/mt today.;SHFE 1110 copper contract prices will fluctuate around RMB 70,000/mt.

SHANGHAI, Aug. 5 (SMM) –Data overnight showed that the US Treasury bond yield plummeted, with two-year yield falling to a record low, increasing market worries over global economic recession. In this context, investors stayed away from riskier assets like stocks, crude oil, copper and commodity currencies and bought in safe-haven assets, sending the US equity markets to dive 5% to a low level of 2011 and crude oil prices down to USD 86/barrel after losing USD 90/barrel. Later the US announced the US initial jobless claims were better than expected, but it failed to ease sluggish market sentiment. As a result, LME copper prices experienced large-scale position closings, met resistance at USD 9,600/mt and lost the 40-day moving average. Finally, LME copper prices closed at USD 9,344/mt, declining significantly by USD 205/mt or a great loss of 2.15%, and the biggest loss in two months. 

Copper prices on the Comex tended to rally in the morning business, but resistance at the 60-day moving average is still heavy. Crude oil prices seemed to fall in the morning session, both LME copper prices and the US dollar index fell. The euro has the risk to move lower due to market risk aversion sentiment during Friday's Asian trading hours, keeping copper markets bearish. Hence, LME copper prices are expected to have weak support at USD 9,300/mt today. In domestic market, the US equity markets slumped by 5% on the previous trading day, and will spread to today's Asian stock markets. Besides, domestic stock markets closed higher but experienced a decline in trading volumes, today's movements will be pessimistic. SHFE three-month copper contract prices will open significantly down at around RMB 70,000/mt, and the longs and shorts will struggle at the price mark, as the shorts will impose great sell-off pressures on copper prices due to pessimism towards the US non-farm payrolls to be announced this evening, and since the longs will try to hold this price mark. SHFE 1110 copper contract prices will fluctuate around RMB 70,000/mt.

Cu morning review

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