The improved outlook of US economy triggered a sharp price
rebound yesterday in Shanghai nonferrous metals market, led by
copper and zinc.
The most actively traded copper futures contracts for February
delivery on Shanghai Futures Exchange, SHFE, surged 3.99 percent to
the daily allowable limit to close at 57,070 yuan per ton. Nearly
all zinc futures contracts on SHFE jumped to the daily allowable
limits, with the most actively traded contract for delivery in
February soaring 3.98 percent to end at 19,455 yuan per ton.
In the international futures markets, most contracts saw big
increases in response to rising market expectations of further
interest rate cut by the US Federal Reserve in December, which
could help stabilize the US financial market. Another interest rate
cut could also further depress the US dollar which, in turn, could
drive up commodity prices.
On London Metal Exchange, the three-month copper futures
contracts rose 1.93 percent, the biggest one-day jump in the past
two week, to $6,850 per ton, while the three-month zinc futures
climbed 1.82 percent to $2,520 per ton.
Analysts say the any improvement on the financial front as a
result of further interest cut would reduce traders’ concern about
the possible slowdown of the US economy.
“The rising expectation about the further interest rate cut by
Fed has boosted traders’ confidence about the US economy, which has
been undermined by the fallout of sub-prime mortgage problems,”
said Zhou Zhiqiang, an analyst at Great Wall Futures in
Shanghai.
Despite continued weak performance in US housing market as
indicated by the newly released figures of housing sales, traders
were encouraged by the positive policy of the US central bank.
Traders have largely shrugged off the rather gloomy latest housing
statistics.
Figures released by the US National Association of Realtors,
NAR, on Wednesday reported that sales of existing single-family
homes and condominiums dropped by 1.2 percent in October to a
seasonally adjusted annual rate of 4.97 million units. The median
price of a home sold last month declined to $207,800, a drop of 5.1
percent from a year ago, the biggest year-over-year price decline
on record.
NAR blamed the October weakness on the fallout from a serious
credit crunch that roiled financial markets in August.
“The further interest rate cut is expected to stimulate the
investment and consumption, which will in turn help promote US
economic growth,” said Li Jingyuan, an analyst at Haitong Futures
in Shanghai.
(China Daily November 30, 2007)
