SHANGHAI, Aug. 11 (SMM) –Rumors spread overnight that France, the second largest economy in the Euro-zone area, would likely lose its AAA credit rating, triggering market suspicion about French banks holding troubled Greek and Italian debt. In response, global stock markets tumbled, with the US equity markets slumping by more than 4%. Meanwhile, investors believed a possible downgrade of France credit rating would further slow the Europe's economy, as European debt crisis is more complicated that it seems to be. As a result, risk aversion sentiment grew, and gold prices climbed above USD 1,800 per ounce. Weighed by great sell-off pressures and declines in US equity markets, LME copper prices lost USD 8,600/mt again during trading hours, and finally closed at USD 8,653/mt, posting its 8-month lowest close.
The euro is expected to move lower due to European debt problems. As its low-end support at the daily moving average will not be easily broken, the US dollar index will move slightly higher during Thursday's Asian trading hours, which will weigh on LME copper prices. Copper prices on the Comex had signs of falling back in the morning business, market sentiment can hardly gather, transactions will be kept cautious. Therefore, the low-end LME copper prices will probably fall below USD 8,500/mt, but will likely get some buying support at lows, with prices expected between USD 8,500-8,700/mt during today's Asian trading hours. In domestic market, China's stock markets will open down affected by a slump in US equity markets. Hence, SMM believes SHFE three-month copper contract prices will open significantly lower, and SHFE 1110 copper contract prices will move in the RMB 64,000-66,500/mt range.