SHANGHAI, Mar. 28 (SMM) – Italy’s centre-left coalition leader Pier Luigi Bersani said his bloc will form a grand coalition with Silvio Berlusconi's centre-Right after inconclusive elections, indicating a renewed general election is imminent. This sent stock markets in many European countries down by more than 1%. The euro crashed through 1.28, while the US dollar index advanced to above 83. Italy's main share index, the FTSE MIB, was down 0.9%, while the Athens General Index also shed 4% following a 5% decline in the previous day. Stock markets in Spain, Germany and France lost nearly 1%, while the UK stock market fell 0.2%.
Banks in Cyprus opened their doors again at midday (10:00 a.m. British time) on Thursday. Among measures imposed to prevent savers from stripping the bank vaults clean when the doors open: withdrawals will be capped at 300 euros (251 pounds) per day, travellers may take no more than 3,000 euros abroad per trip. The controls, announced in a finance ministry decree, would allow unlimited use of credit cards within Cyprus, but set a monthly limit of 5,000 euros for Cypriots using credit cards abroad. Investors are cautious about the progress made in the euro zone, causing commodity prices to slide along with the euro. LME copper found its low at USD 7,576/mt.
Later, the US announced that Americans who signed contracts to buy previously occupied homes fell 0.4% MoM in February, better than the expected 0.7% decline. Pending home sales in the same month grew 8.4% YoY and those in January rose to the highest since 2010. These positive economic data helped LME copper recover losses and close unchanged at USD 7,640/mt.
Issues in Cyprus and Italy will continue to dampen market sentiment, and the US dollar index will hover at high levels. LME copper should move within USD 7,570-7,670/mt during the Asian trading session on Thursday. The Shanghai Composite Index will meet resistance at all moving averages, while SHFE 1307 copper contract prices should edge down to RMB 55,300-55,900/mt. In spot markets, cargo holders will be anxious to sell for cash, with premiums over SHFE 1304 copper contract prices expected to slightly narrow to RMB 0-100/mt.