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BASE METALS: Stronger Equity Markets Boost Copper Prices
Aug 16,2011 08:41CST
industry news
Source:SMM
Copper futures edged higher on weaker dollar and stronger equity markets.

Aug 15, 2011 (Dow Jones) -- --Comex Sep copper up 0.10c at $4.0130 a pound

--Weaker dollar boosts copper's allure

--Higher equity markets stoke demand for risky assets like commodities

By Tatyana Shumsky
   Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Copper futures edged higher on weaker dollar and stronger equity markets.

The most actively traded contract, for September delivery, was recently up 0.10 cents at $4.0130 a pound on the Comex division of the New York Mercantile Exchange.

Thinly traded August-delivery copper was down 0.10 cents at $4.0085 a pound after just 18 contracts changed hands.

Higher equity markets stoked investors' tolerance for risk, luring buyers back to riskier markets like copper futures. The Dow Jones Industrial Average was recently up 122 points, or 1.1%, at $11391 as investors returned to the stock market with increased risk appetite.

Copper and stocks are both considered riskier investments because they are sensitive to changes in economic growth. The red metal is widely used in everyday goods from cell phones to household plumbing and prices fall when economic activity slows.

A weaker dollar added to copper's allure, as dollar-denominated contracts seem cheaper to buyers using foreign currencies when the greenback eases. The ICE Dollar Index was recently at 73.907, down from 75.656 late Friday in New York.

"Four dollars--that's my line in the sand between bullish and bearish sentiment," said Adam Klopfenstein, senior market strategist with MF Global. He added that without a substantial move up in equities copper futures are likely to stay in a range between $3.95 and $4.05.

 

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