SHANGHAI, Oct. 12 (SMM) –Markets overnight expected a recovery in Chinese stock markets after Central Huijin Investment Ltd announced to buy more shares of four major Chinese state-owned commercial banks, and the share purchase was the first since the global financial crisis in 2008 and 2009. However, Chinese stock markets still remained weak after the news, increasing market worries about China demand given already tightening monetary policies and weakening Chinese property markets. Besides, Slovakia was the last EU member to vote on the euro zone's rescue fund and to approve an expansion of the European Financial Stability Facility (EFSF), leading market investors to become cautious in addition to pessimistic sentiment towards the escalating risks of Greek debt default. In response, LME copper prices moved lower, but got brief support at the 10-day moving average after falling below the 5-day moving average, with a low at USD 7,159/mt. LME copper prices finally ended the day at USD 7,286/mt, down 3%.
The Standard $ Poor's (S&P) this morning downgraded the credit ratings of ten Spanish banks, placing four to a negative outlook, and Fitch followed the suit to cut credit ratings of six Spanish banks including Santander Central Hispano S.A. There was news that Slovakia refused the EFSF plan, heightening market concerns over Europe's debt crisis and negatively affecting the Euro's movements today. The US Senate approved the bill on RMB exchange rate, which will force RMB to appreciate, impact China's imports and exports, worsen the country's inflation, and all are negative for future copper demand. LME copper prices opened lower at below the 5-day moving average this morning, with USD 7,300/mt becoming the great resistance. Therefore, LME copper prices are expected to move between USD 7,150 -7,300/mt during today's Asian trading hours. Chinese stock markets will move lower following the previous day's declines. The SHFE/LME copper price ratio will continue to fall. Hence, SHFE copper prices will likely lose RMB 54,000/mt, while SHFE 1112 copper contract prices will fluctuate in the 53,500-54,500/mt band.