SMM Morning Review - 2011/10/19 Copper Market

SHANGHAI, Oct. 19 (SMM) –The US and European markets overnight continued to absorb China's GDP data for the third quarter, believing China's Central Bank would extend its tight monetary policies so long as the country's economic growth remains above 9%, and that capital shortages would still be a factor keeping investors from entering into the market. Meanwhile, market worries over the European debt crisis were escalating after Moody's said the outlook of France's AAA rating was under pressure and warned of many challenges in the forthcoming months, which kept market speculators especially cautious about operations. In response, LME copper prices moved lower in the earlier trading hours, falling to test support at USD 7,200/mt. However, the US in the evening announced the better-than-expected economic data, and the US Home Builder Confidence in October rose to the highest in a year and a half, causing US equity markets to close 1% higher. Coupled with the profit-taking of short investors, LME copper prices narrowed losses at the tail of trading, returning to a price range reached in the earlier opening hours, with prices finally ending at USD 7,442/mt.

The Standard & Poor's (S&P) cut the credit ratings of Italian banks and financial institutions this morning, and Moody's also downgraded Spain's credit ratings, weighing down the Euro's movements today. A stable US dollar index will impose great pressures on copper prices. Coupled with the fact that market players are eagerly awaiting the European Union's (EU) final solution for Europe's debt crisis, market activity will be relatively cautious. Therefore, LME copper prices will move between USD 7,330-7,480/mt during today's Asian trading hours, with great resistance at the high-end. Chinese stock markets will open higher and lower to test support at 2,400 points. SHFE copper price trends will remain weak than those for LME copper prices, while SHFE 1112 copper contract prices will fluctuate in the RMB 54,300 -55,500/mt range.