SHANGHAI, Nov. 24 (SMM) -- Weak economic data from China, Europe and US spurred market concerns over a slowdown of global economic growth. The Shanghai Composite Index fell below an important level, and European and US stocks continued to plummet. In addition, Shanghai metal prices have fallen for several consecutive days, leaving overall market sentiment lackluster. The pessimism dominated the Shanghai metal market, and SMM predicts metal prices will remain weak in the near term.
HSBC Holding PLC announced on November 23rd that the preliminary HSBC Purchasing Managers' Index (PMI) for China's manufacturing sector was 48.0 in November, much lower than 51.0 in October. The PMI fell below 50, indicating a pessimistic outlook for China’s overall economic conditions. Germany failed to find buyers for 35% of the 10-year government bonds offered for sale, sparked fears the debt crisis was beginning to threaten even Europe's biggest economy. Fitch said that France's top AAA credit rating could be under threat if the euro zone debt crisis worsens, and added that France needs to take additional measures to cut deficit. A PMI for the euro zone indicated private-sector activity in the region continued to contract in November, intensifying market concerns that the European economic downturn could result in deteriorating debt crisis.
In response, the Shanghai Composite Index closed below 2,400 points on November 23rd, while Europe and US stocks closed down as well. Dow Jones Industrial Average closed at 11,257.55 points, down 236.17 points or 2.05%, Standard & Poor's 500 Index closed at 1,161.79 points, down 26.25 points or 2.21%, and Nasdaq Composite Index closed at 2,460.08 points, down 61.20 points or 2.43%. Stoxx Europe 600 Index closed down 1.3% at 220.31 points. German DAX 30 Index closed down 1.4% at 5,457.77 points, FTSE 100 Index closed down 1.3% at 5,139.78 points, and France CAC 40 Index closed down 1.7% at 2,822.43 points.
Metal prices retreated amid growing uncertainties over domestic and international economic conditions. Although metal prices regained some losses early this week and copper prices remained at high premiums, caution still dominates the market, and Shanghai metal prices continue to fluctuate in a narrow band. Meanwhile, SHFE copper price rise should be short-lived given intraday weak transactions. SMM predicts Shanghai metal prices may fluctuate lower in the near term, since market concerns over the economic downturn mount again as the effect from China’s relatively easing monetary policy wanes.