Copper Rises After Chinese Stimulus News

Copper traded near a one-week high in London after a report that China’s central bank intensified stimulus measures to support growth, boosting the demand outlook in the biggest metals user. Other metals fell.

The People’s Bank of China is injecting 500 billion yuan ($81 billion) into the nation’s five biggest banks, according to a government official familiar with the matter. The Federal Reserve will release a policy statement and new economic projections today as a meeting of officials ends.

“First impressions are that it is very significant,” Joseph Murphy, an analyst at Hermes Fund Managers Ltd., said by e-mail today, referring to the PBOC. “Firstly because of its size, and also the signal it sends to the market. Up to now, any easing has been very focused. This is much more economy-wide.”

Copper for delivery in three months climbed 0.3 percent to $6,920 a metric ton by 12:46 p.m. on the London Metal Exchange after touching $6,992 yesterday, the highest since Sept. 9. The contract for December delivery fell 0.7 percent to $3.1435 a pound on the Comex in New York. An index of the six main metals traded on the LME rose the most in almost four weeks yesterday.

Economists in a Bloomberg News survey yesterday were almost evenly divided on whether the Fed will retain a reference to interest rates staying low for a “considerable time.”

“It may not be until tomorrow that we get a better feel for how the market has interpreted the combination of the Chinese stimulus and the Fed guidance,” William Adams, an analyst at in London, said in a note.

Comex copper jumped as much as 4.1 percent yesterday, the largest intraday increase since May 2013. That triggered a “stop spike event,” halting trading for 10 seconds with all transactions remaining valid, according to CME Group Inc., which owns the exchange.

Copper stockpiles monitored by the LME fell 0.6 percent to 155,400 tons, data showed today. Orders to take the metal from warehouses slid 2.4 percent to 39,025 tons. Zinc removal orders jumped 14 percent to 72,500 tons on bookings in Detroit and New Orleans, extending this week’s increase to 39 percent.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza