SHANGHAI, Jun. 18 (SMM) –
1. Greece's general election will decide if Greece remains in the euro zone. Support for the new Democratic and left-wing parties were close, raising hopes Greek voters will accept austerity requirements. In response, Greece's stock index rose by 8%.
2. In order to cope with the crisis, major central banks will supply liquidity to Greece in the case of market turmoil. G7 leaders will hold an emergency meeting next Monday or Tuesday, with central bank presidents expected to attend.
3. China's central bank took measures to boost its economy, including lowering interest rates and loosening regulations for the property sector, and these moves boost market confidence.
Spanish 10-year government bond yields rose to 6.5%, and the Bank of Spain has asked for a bailout from the ECB. Italian 10-year and 1-year government bond yields continued to rise.
The sluggish economic conditions in the euro zone cannot improve in the short term.
In general, LME nickel prices will continue to fluctuate up to Greece's general election. A slight majority of Greek voters are unwilling to allow Greece exit the euro zone, so Greece may be forced to concede to ECB demands. In this context, LME nickel prices should rise to USD 17,500/mt, but unlikely hit USD 18,000/mt until the European debt crisis is resolved. If the result of Greece's general election turns out negative, LME nickel prices should plunge to USD 16,000/mt.