SHANGHAI, Apr. 25 (SMM) - German business confidence fell for a second month in April, missing even the lowest estimate in a Reuters poll. The US March durable goods orders recorded the biggest decline in seven months, adding to apprehension over faltering global economic recovery. Investors are cautious about the earnings reports of Boeing and Apple, leaving US stocks in fits and starts. Although slowing economy in the US, Europe and Asia curbed gains of copper prices, worsening economy has raised hopes for further easing policies by major central banks. As such, European and US stocks closed 0.7% higher, preventing sell-off in risky assets such as base metals. Short-covering by some investors helped LME copper stay at high levels, which finally closed 2.8% higher at USD 6,999/mt. Sell-off at above USD 7,000/mt was reported, which means LME copper may pull back from high levels after hitting high in the short term.
Germany’s April IFO business index fell from 106.7 to 104.4. With Germany’s PMI and ZEW economic sentiment indicator also being weak, market expectations for easing policy are running high. NOMURA Securities, UBS, Commerzbank and the Royal Bank of Scotland all predict a 25 basis points cut in interest rate by the ECB in its interest rate meeting on May 2. Italian President Giorgio Napolitano appointed Enrico Letta to form a new coalition government on April 24, easing deadlocked political situation in the country. Italy's two-year borrowing costs fell to their lowest since 1999. Portugal’s Minister of Economy announced another round of stimulus plans. In this context, European stocks rose.
US March durable goods orders tumbled to -5.7% in March. Non-defense capital goods orders excluding aircraft edged up 0.2%, below the forecasted 0.3%. This is due largely to a decrease in Boeing’s March orders and a 33.2% decline in national defense due to automatic spending cuts
In other markets, the US dollar index retreated from 83. European and US stocks were in fits and starts. Base metals on the LME rose on short-covering.
Disappointing US economic data and hopes for easing policy will keep LME copper within USD 6,920-7,020/mt during the Asian trading hours on Thursday. The Shanghai Composite Index will remain weak, while SHFE 1308 copper contract will fall back after touching high, with prices between RMB 49,800-50,700/mt. In spot markets, cargo holders will continue to sell at highs as the months comes to an end. Spot copper premiums are expected to narrow to RMB 120-220/mt against SHFE 1305 copper contract.