Industrial metals get a boost
Copper rose yesterday, as improving US economic data boosted investors' confidence that OECD demand for industrial metals could start to pick up. Copper for three-month delivery on the London Metal Exchange was at $6,871.5 (Dh25,237) a tonne in rings from Tuesday's $6,820.
A broadly weaker dollar also supported metals, making dollar-priced commodities cheaper for non-US investors. But copper lost grip of its intraday high of $6,948, as the dollar pared some of its early losses. Upbeat US data included Tuesday's home sales numbers, Monday's manufacturing figures and economic growth data on Friday.
Investors are scouring for signs of economic improvement after the economic crisis hammered Western demand for base metals, leaving China as a vital support for the market. "It feels like a more positive environment than it did," said Stephen Briggs, analyst at RBS.
"The economic data that came out on Monday was a driving force allowing metals to stabilise and then recover," he added. "This week they'll continue to claw back a little bit of the losses of the last couple of weeks."
Global stock markets also rallied, as the data and strong US corporate earnings bolstered risk appetite. Base metals prices bounced also because investors' concerns about monetary tightening in China were starting to ease. Copper was hit in late January by investors fears that signs of fiscal tightening in China could hit demand from the world's top consumer of industrial metals.
"China's macro-environment has changed from one predominantly focused on growth to one where balancing growth and inflation has become increasingly important to policymakers," Barclays Capital said in a note.
Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here.
Follow Emirates 24|7 on Google News.