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Copper futures edge lower after China, Japan data disappoints

Published 12/08/2014, 05:17 AM
Updated 12/08/2014, 05:17 AM
Copper declines after downbeat China, Japan data

Investing.com - Copper prices declined on Monday, as disappointing data from China and Japan added to concerns over the global economic outlook.

On the Comex division of the New York Mercantile Exchange, copper for March delivery shed 1.3 cents, or 0.44%, to trade at $2.890 a pound during European morning hours.

Futures were likely to find support at $2.860 a pound, the low from December 3, and resistance at $2.939, the high from December 5.

Data released earlier showed that China’s exports climbed 4.7% from a year earlier in November, missing expectations for a 7.9% increase, while imports fell 6.7%, compared to forecasts for a gain of 3.5%.

The country's trade surplus widened to $54.5 billion last month from $45.4 billion in October, compared to estimates for a surplus of $43.2 billion.

The downbeat Chinese data added to hopes that policymakers in Beijing will implement more stimulus to shore up its economy.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

Separately, revised data showed that Japan's economy shrank by an annualized 1.9% in the third quarter, more than the preliminary estimate of a 1.6% decline.

On a quarter-over-quarter basis the economy contracted by 0.5% in the three months to September, compared to a preliminary estimate of a 0.4% contraction.

On Friday, copper for March delivery lost 1.2 cents, or 0.41%, to settle at $2.902 a pound as upbeat U.S. employment data added to expectations that the Federal Reserve could raise interests sooner and faster than previously expected.

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The U.S. economy added 321,000 jobs in November, far more than the 225,000 forecast by economists and the largest monthly increase in almost three years.

October’s figure was revised up to 243,000 from a previously reported 214,000 and the unemployment rate remained unchanged at a six-year low of 5.8%.

The unusually strong data saw investors bring forward expectations for the first hike in U.S. interest rates to mid-2015 from September 2015 before the report.

The US dollar index, which measures the greenback against a basket of six major currencies, hit a peak of 89.57, the strongest level since March 2009.

A stronger U.S. dollar usually weighs on copper, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.

Elsewhere on the Comex, gold futures for February delivery tacked on $5.60, or 0.47%, to trade at $1,196.00 a troy ounce, while silver futures for March delivery picked up 10.0 cents, or 0.62% to trade at $16.35 an ounce.

Gold prices are likely to remain vulnerable in the near-term amid indications a strengthening U.S. economic recovery will force the Federal Reserve to start raising interest rates sooner and faster than previously thought.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

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