SHANGHAI, Mar. 14 (SMM) –Base metals on the LME closed with strong gains Tuesday, lifted by upbeat economic data and positive results from the US Federal Reserve (Fed) policy meeting. Base metals are likely to extend gains for the near future in the face of alleviated Greek debt crisis and signs of economic recovery.
The Federal Open Market Committee (FOMC) announced March 13 to maintain low rates of 0-0.25% until at least of late 2014, but didn't indicate further monetary easing. The Fed weakened the impact of rising oil prices, saying inflationary pressures would just increase temporarily. Data showed US retail sales rose by 1.1% in February, and recorded their largest gain in five months. The Fed's statements on the US economic status and upbeat economic data boosted the US financial markets. US equity markets also ended significantly higher March 13. The Dow Jones Industrial Average advanced 217.97 points or 1.68% to 13,177.68, the Nasdaq Composite Index rose 56.22 points to 3,039.88, and the Standard & Poor's 500 Index increased 24.86 points to 1,395.95. This helped prices of base metals and other risky assets trend higher. Positive news also came from Greece, where Fitch raised long-term foreign and local currency issuer default ratings from "selective default" to "B-" while placing a stable outlook, and short-term foreign currency issuer default rating from C to B, an indication of the credit rating agency's approval on the Greek bailout plan. Market worries over a messy Greek debt default vanished, which will help heighten global risk appetites and push up financial markets as well as base metal prices.
LME three-month copper contract prices ended at USD 8,552/mt March 13, up USD 105/mt or 1.25%. LME aluminum prices closed USD 29/mt higher at USD 2,255/mt, LME lead prices settled USD 21.25/mt higher at USD 2,153/mt, and LME zinc prices finished USD 31.75/mt at USD 2,108/mt. Base metals prices are increasing stably, since previous price declines were slight and temporary, and enticed buying at key price marks. As such, SMM anticipates base metals will extend gains for the foreseeable future.