SHANGHAI, Oct. 24 (SMM) – US corporate earnings reports came in mixed overnight. The debt/GDP ratio of the US has now reached an overwhelmingly high of 110%, driving a retreat in US shares. The S&P 500 Index snapped a 5-day winning streak. This prompted investors to close positions, sending LME copper down over 2% to USD 7,176/mt on Wednesday. The red metal will face correction following sharp declines.
The Federal Housing Finance Agency (FHFA) reported that US home prices rose 0.3% in August from July. Although this marks a 19th straight month of gain, the growth rate was the lowest level in 11 months.
Consumer Confidence Index in the euro zone rose to -14.5 in October, up from September’s -14.9. Minutes of the Bank of England (BOE)’s October policy meeting indicated that the country’s unemployment rate in H2 2013 will fall at a faster pace than expected and economic growth will accelerate. Spain posted a 0.1% QoQ growth in its Q3 GDP, ending nine quarters of recession. Upbeat European economic data helped the euro stay above 1.37 against the US dollar.
The People’s Bank of China (PBOC) suspended reverse repos against overheated credit lending in September. Sources indicated yesterday that write-down bad loans at China’s five major banks during H1 reached RMB 22.1 billion, tripling the RMB 7.65 billion recorded for the same period last year. Investors are worried that banks will tighten lending in response to growing bad loans.
European and US shares generally closed with losses. Base metals on the London Metal Exchange also closed the day down.
A mild growth is expected in China’s flash manufacturing PMI due to be released today, which will appease market concerns. LME copper will face correction following sharp declines, with prices expected between USD 7,170-7,250/mt during Thursday’s Asian trading hours. The Shanghai Composite Index will tick up. SHFE 1401 copper contract, the most active one, will drift higher after a low opening and fluctuate between RMB 51,700-52,400/mt. In spot markets, cargo holders will hold off from selling at low prices. Demand will pick up at below RMB 52,000/mt. A contango of RMB 20-140/mt is expected over SHFE 1311 copper contract.