SHANGHAI, Jul. 20 (SMM) – Investors in the US and European markets Thursday continued to absorb Chinese Premier Wen Jiabao's comments, saying China's job market is likely to deteriorate further and the government needs to step up efforts to create more jobs. This triggered market speculation the Chinese government would introduce more loose monetary measures in the immediate future, and some market participants even predicted China's central bank would take the action this week. Besides, the lower house of German's parliament approved the country's participation in a bailout for Spain's ailing banking industry, which indicated the European debt crisis may ease some from recent stagnation and thus lifted commodity markets with Brent crude oil increasing rapidly by nearly 3%. US and European stock markets also extended gains. LME copper continued to climb amid a slight improvement in the macro environment and touched a high at USD 7,812/mt after increasing above USD 7,800/mt. However, the US later announced a spate of disappointing economic figures and restricted LME copper's upside room. The National Association of Realtors (NAR) reported Thursday that the US existing home sales slipped by 5.4% in June to a seasonally adjusted annual rate of 4.37 million units, well below market estimates of an increase of 1.1% and 4.63 million units. Meanwhile, the US Labor Department announced that the US initial jobless claims were 386,000 last week, higher than market anticipation of 365,000, and also above the revised 352,000 in the previous week. In consequence, LME copper retreated below USD 7,800/mt and already stood stably at the 60-day moving average before settling at USD 7,770/mt, still a gain of nearly 1.7%.
German's parliament chose to support Spanish banks and reassured investors who earlier were worried Germany's unyielding attitudes would negative affect development in rescuing the European debt crisis. This can help the euro keep strong during the day. As such, SMM holds the view LME copper will move at high levels during Friday's Asian trading session but easily suffer profit-taking at price levels above USD 7,800/mt, with prices expected between USD 7,700-7,800/mt. The Shanghai Composite Index is likely to meet resistance at 2,200. SHFE copper prices will extend increases after starting higher, but both longs and shorts may leave markets in the afternoon for risk aversion, while SHFE 1211 copper contract will hover in the RMB 56,000-56,800/mt range. Spot copper offers are estimated between premiums of positive RMB 20-100/mt versus SHFE 1208 copper contract.