SHANGHAI, Jul. 22 (SMM) – The S&P hit a fresh record high last Friday. Meanwhile, the euro rallied due to expectations that the G20 summit will yield good result. This helped LME copper close USD 11/mt higher at USD 6,920/mt.
Japan’s ruling coalition led by Shinzo Abe won a majority of seats in the upper house of parliament in Sunday’s election, which will give his party a stronger mandate to implement reforms aimed at invigorating the country’s economy and a stronger control over both houses of parliament. However, the coalition failed to secure two- thirds approval by both houses of parliament, disappointing markets some.
The People’s Bank of China (PBOC) announced last Friday it will cancel the minimum lending rate of financial institutions. This will help reduce financing costs for enterprises and promote development of the real economy. Base metals prices will gain traction for the near term as a result.
Canada’s CPI rose 1.2% YoY in June, a four-month high. The index, however, fell short of the 2% target due to rising gasoline prices and passenger vehicle costs. This will give the central bank of Canada no pressure to hike interest cuts, pushing the Canadian dollar up against the US dollar. Italy’s industrial orders advanced 3.2% MoM in May, the third straight month of growth due to growing demand domestically and overseas. Germany’s PPI climbed 0.6% YoY in June, in line with forecasts.
The US dollar index shed 0.17%, while the Euro index closed 0.23% higher last Friday. Global stock markets mostly dropped, but S&P 500 index continued to hit new record high. LME base metals prices inched up, except aluminum and tin.
The PBOC’s decision last Friday to cancel the minimum lending rate of financial institutions will push Chinese stock market higher today. LME copper will gain upward momentum from a stronger euro, with prices expected between USD 6,930-7,030/mt during Monday’s Asian session. Rising Chinese stock market will push SHFE 1311 copper contract higher to RMB 49,700-50,500/mt. In spot market, spot premium will remain high as delivery of copper signed on a long-term basis is approaching. The price gap between SHFE 1308 and 1309 copper contracts will widen further. Spot premium of RMB 120-400/mt is expected over SHFE 1308 copper contract prices.