SHANGHAI, Oct. 9 (SMM) – The International Monetary Fund (IMF) trimmed its projections for global economic growth, citing deteriorating growth prospects in emerging markets. Although Chinese investors have returned from the week-long holiday, partial US government shutdown proves a drag on risky assets. Partial US government shutdown has headed into its second week, but there have been no signs of progress in the budget talk gridlock. Against this backdrop, shares in technology companies suffered from massive selloff and US stocks extended declines, with the NASDAQ and S&P down 2% and 1.2%, respectively. LME copper rose to USD 7,295/mt, but fell below its opening price at the tail of the session, closing Tuesday USD 5/mt lower at USD 7,233/mt. The red metal on the LME has been fluctuating between USD 7,000-7,500/mt since early August, irrespective of changes in macro front. On the technical side, LME copper will remain range-bound for the near future.  

France’s trade deficit narrowed to EUR 4.9 billion in August on a seasonally adjusted basis. After the breakdown, both exports and imports fell, with imports dropping at a faster pace. Bank of France Business Sentiment Indicator stood at 97 in September, below the average of 100. This prompted Bank of France to cut its growth forecasts of Q3 GDP by 0.1 percentage point to 0.1%. Germany’s exports in August were slightly below expectations, but beat imports. The country’s trade surplus expanded to EUR 15.6 billion in August after being seasonally adjusted. Orders in German manufacturing sector, however, fell surprisingly to 0.3% MoM in August on a seasonally adjusted basis. Housing starts in Canada increased to 193,637 units in September, capping forecasts.      

The IMF lowered its 2013 and 2014 growth forecasts for global economy on Tuesday, claiming that capital exodus will further dampen growth in emerging markets. The bank warned the world economy will be in severe jeopardy should the US government defaults. It cut its 2013 and 2014 growth projections for the Chinese economy to 7.6% and 7.3% from 7.8% and 7.7%, respectively. 

HSBC’s flash China Service PMI for September came in at 52.4, below August’s 52.8. China’s official non-manufacturing PMI rose to 55.4 in the same month, signaling modest growth in the country’s service sector. A report from the State Information Center showed China’s economic growth will stabilize in Q4 and that GDP for Q4 and the whole of 2013 will grow around 7.6%. The report also says inflation rate will rise mildly and unemployment rate will remain little changed.    

The US dollar index gained 0.14%. European and US stocks mostly fell, while most Asian stock markets rose. London gold and silver lost 0.3% and 0.28%, respectively. Base metals on the London Metal Exchange were mixed. 

The US budget talk impasse will continue to keep markets cautious and Asian stock markets will face downward correction. As such, LME copper is expected to move in a narrow range of USD 7,220-7,270/mt during Wednesday’s Asian trading hours. The Shanghai Composite Index will stay at high levels. SHFE 1312 copper contract will fluctuate between RMB 52,300-52,800/mt. In spot markets, trading activity will return to normal with the end of the holiday. A contango of RMB 0-20/mt and a backwardation of RMB 0-100/mt are expected over SHFE 1310 copper contract.