Copper Climbs for First Time in Three Days on Fed, ECB Optimism
Copper rebounded from the biggest drop in a year in London after the European Central Bank cut interest rates to a record low to stimulate growth.
The ECB cut its benchmark rate to 0.5 percent from 0.75 percent. ECB President Mario Draghi will hold a news conference later. Copper also rose after the Federal Reserve said it will buy bonds at a monthly pace of $85 billion while being prepared to raise or lower purchases according to economic conditions.
“The re-emergence of Chinese flows during today’s session followed by comments from Draghi at the ECB press conference should offer a far clearer outlook of the headwinds facing the market,” George Adcock, an analyst at Marex Spectron Group in London, said by e-mail today.
Copper for delivery in three months climbed 1.7 percent to $6,913 a metric ton by 1:12 p.m. on the London Metal Exchange. The metal settled 3.7 percent lower yesterday, the biggest drop since April 10, 2012. Copper for July delivery on the Comex gained 1.6 percent to $3.128 a pound. Markets in China reopened today after a three-day public holiday.
Tin, last year’s best performing metal on the LME, and nickel, last year’s worst, both entered a bear market yesterday. LME metals fell yesterday on concerns about demand in China, the biggest user, after worse-than-expected manufacturing data.
A private gauge of Chinese manufacturing declined last month to 50.4, according to HSBC Holdings Plc and Markit Economics. That compares with 51.6 for March. A reading above 50 indicates expansion.
“The Chinese flows are generally driving the copper market,” Adcock said. “Given the questionable demand picture coming from the region, the base purchases tend to provide a good gauge of how order books are looking. The macro environment continues to look unhealthy.”
Aluminum, lead, nickel and zinc climbed, while tin was little changed on the LME.
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