SHANGHAI, Jul. 2 (SMM) – Base metals increased sharply June 29, the last trading day in June, boosted by the result of EU summit, among which LME three-month copper contract price presented the biggest gain for the year. Thus, the concerns dominating base metal markets since the start of May moderated temporarily.
EU leaders agreed to bail out banking sectors in Spain and Italy, and proposed to offer the USD 149 billion plan to boost economic growth, shoring up confidence of global investors. Market worries on the debt issues of Italy and Spain were somewhat eased by the outcome of the EU summit, with Spanish 10-year government bond yield falling to 6.32% and Italian 10-year government bond yield falling to 5.89% June 29. Global equities also benefited from the EU summit. On June 29, the Dow Jones Industrial Average Index surged 277.83 points to 12880.09 points, up 2.20%, and S&P 500 Index climbed 33.12 points, or 2.49%, to close at 1362.16 points, Nasdaq ended the day at 2935.05 points, up 85.56 points or 3.00%.
According to China Federation of Logistics and Purchasing and Investigation Center of National Bureau of Statistics of China, China’s manufacturing PMI for June was 50.2%, down 0.2 percentage point and hitting a seven month low. This indicated China’s economic development was still under downward pressure. However, the decline was narrowed noticeably, implying that economic growth, although still showing a downtrend, may stabilize in the foreseeable future. With policies introduced progressively for ensuring a steady growth, the drop of investment growth was slower, while the increase in consumption improved marginally, and exports growth was also rallying rapidly.
Base metals have been weighed on and have touched new lows for the year during the first six months this year with negative news pertaining to European Debt Crisis reported frequently, and China’s stock markets were also dragged down. The unexpected outcome of EU summit boosted market sentiment than has been depressed for long, so the sharp rebound of nonferrous metals which dropped significantly earlier is understandable. Domestic metal markets are expected to benefit the most this week from the positive result of EU summit.