Shanghai Base Metals to Rebound Continuously on Greek Debt Talks

SHANGHAI, Feb. 8 (SMM) –The Greek government reached preliminary consensus in a February 7th meeting on IMF and EU's austerity and economic reform requirements, indicating the Greek debt crisis is developing in a positive direction. Greek officials disclosed that their government is preparing for a 130-billion-euro aid agreement. Development of major financial markets overnight also showed recognition of Greek efforts to solve its debt crisis. Commodities rebounded and LME base metals recovered most losses of the day. Shanghai metals are expected to climb slightly for the foreseeable future.

US equities closed with gains February 7th as investors were encouraged by progress in Greek austerity measures. The Dow Jones Industrial Average settled 33.07 points or 0.26% up at 12,878.20, the highest since May 2008, paring early trading session's losses. The Standard & Poor's 500 Index gained 2.72 points or 0.20% to end at 1,347.05. The Nasdaq Composite Index climbed 2.09 points or 0.07% to 2,904.08. On economic data front, the US Federal Reserve (Fed) announced February 7th Consumer Credit for December 2011 increased significantly for a second consecutive month, rising by USD 19.31 billion, well above than a rise of USD 7.5 billion projected by economists. Fed's Chairman Ben Bernanke stated testimony to the Senate Budget Committee February 7th, saying the jobless rate edged higher and shall arouse the attention of currency policymakers. These statements are interpreted the Fed will maintain existing interest rate at low levels. 

According to sources, Greece's new round of bailout deal is likely to be approved very soon, and political leaders in the country tend to reach consensus on the implementation of austerity measures. Combined with market speculation on Fed's extension of low interest rate for the long term, market risk aversion is weakening. As such, Shanghai base metals will probably continue to rebound for the near future.