SHANGHAI, Oct. 13 (SMM) – Shanghai metals rebounded yesterday with rising Chinese stock prices and increased market confidence. However, we believe this rebound is largely due to the excessive drop during previous period. Though copper and zinc have seen gains today, investors are still quite cautious towards metals as responded by the two metals’ upward paces.
The European Committee announced on October 12th a “roadmap” for solving the European debt crisis, delivering 5 problems that need immediate countermeasures. Meanwhile, most investors expect Slovakia’s parliament to approve the EFSF expansion. The much better-than-expected industrial production in the euro zone and alleviated inflation pressure in France also helped reduce investor worries towards the euro zone. As a result, the euro surged against the US dollar, posing pressure for the latter, and metals rebounded with European and US stocks.
China’s State Council announced 9 new financial policies yesterday to support development of the country’s small businesses, which also helped Chinese stock prices and Shanghai metals climb. However, the rebound in Shanghai metals is mostly due to the previous plunge. Whether these metals can maintain the rallying trend is still dependent on material improvement in China’s tight capital supply. Meanwhile, China will release macro economic data during the 3rd quarter as well as in September this Friday, about which investors are cautious. Therefore, Shanghai metals are expected to fluctuate within narrow ranges during the last two trading days of this week.