SHANGHAI, Jun. 27 (SMM) – The financial market remained weak Tuesday. Investors said Moody's was planning to slash Spain's credit rating to junk status, while the cost of default insurance for Spain's largest banks and companies increased to historically record highs. Besides, German and Italian prime ministers made unfavorable comments on Europe's united bonds, causing the credit ratings agency Egan-Jones to lower Germany's credit rating. Market sentiment was thus depressed and investors were worried that the forthcoming EU summit was unlikely to yield any substantive results with regard to the European debt crisis. Hence, the euro dipped to the lowest in over two weeks, completely coming under pressure at 1.25. Later, the US released uninspiring economic figures, showing that Conference Board's consumer confidence for June slipped to 62, a drop for a fourth time, while the US Richmond Fed Manufacturing Index for June reversed gains seen in May. However, the US S&P/CS20 city home price index picked up in April for three consecutive months, a sign the US housing market continued to stabilize, and this helped US equity markets close higher and base metals move away from the lows. LME copper therefore hovered narrowly around USD 7,340/mt during Tuesday's US and European trading session, without a clear trend but still with buying from some Chinese traders at USD 7,300/mt owing to speculative space. LME copper finally settled at USD 7,360/mt, a slight loss of RMB 25/mt.
The euro will keep fluctuating feebly Wednesday in the face of uncertainty in the European debt prospects, while investors will remain cautious ahead of the EU summit. As such, SMM believes that LME copper will lurch narrowly between USD 7,320-7,380/mt during Wednesday's Asian trading hours. The Shanghai Composite Index will test support at 2,200. SHFE copper prices will start lower before fluctuating, with SHFE 1210 copper contract moving in the RMB 53500-54,000/mt range. Spot copper premiums are estimated between positive RMB 200-250/mt versus SHFE 1207 copper contract.