SHANGHAI, May. 16 (SMM) – Leaders of different parties in Greece still failed to reach an agreement on forming a coalition government Tuesday for 9 days in a row, and Greece's President announced the country would hold another round of elections. This raised market fears that Greece may exit the euro zone area, believing further political and economic upsets there would likely hurt global economic growth and cap demand. Therefore, the euro slid by nearly 1%, which sent a series of risky assets down. US equity markets also fell, while Greek stock markets slumped by 3.6%. The US dollar, though, stood above 81 before climbing to a 5-month high of 81.292. Both gold and crude oil prices came under pressure and closed with losses. As a result, LME copper prices also retreated and gathered falling momentum as investors closed positions, reaching a low at USD 7,732/mt and finally settling USD 73/mt lower at USD 7,755/mt, with growing upside resistance.
Owing to uncertainty in Greece, the euro should keep fluctuating feebly. From technical indicators, LME copper is unlikely to make corrections and will suffer a new resistance at USD 7,800/mt after losing this price mark Tuesday, with prices expected between USD 7,700-7,800/mt during Wednesday's Asian trading session. Despite a high settlement on the previous day, Chinese stock markets will fall since US equity markets closed down on the prior day. SHFE copper will post weak performance after starting slightly down, and then test a low at RMB 55,000/mt, with severe struggle between long and short investors. SHFE 1208 copper contract will lurch in the RMB 54,800-55,700/mt range. Spot copper premiums are estimated between positive RMB 20-100/mt versus SHFE 1206 copper contract.