What's Moving the Market?
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20r -Oc-ob
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Following last week's "carnage" on the London Metal Exchange base metal
complex, as described by one trader, the metals bounced back a little in
premarket business Monday. The London-based trader told Platts: "The complex
got a serious battering -- Friday was carnage." A second trader noted,
sarcastically, that, "last week was a lot of fun, copper saw its biggest
one-week drop in 22 years." The mayhem is the continuation of the
ever-deepening financial crisis currently tearing global markets to shreds.
Last week stock markets in London, New York, Tokyo and Germany all lost
roughly 20% of their overall value. But following a G7 meeting over the
weekend, in which finance ministers showed that now any actions will be taken
to bolster the global economy, financial markets were starting to perk up in
early trade Monday, in turn lifting metals.
Three-months copper increased $165 from Friday's close to be bid at $4,965/mt
at 0931 GMT. The first trader said: "Last Friday copper got down to $4,570 --
closing around $4,800 -- but opened in the Far East at $4,600. However, with
stock markets showing some confidence this morning, the FTSE 100 is up 5%,
metals have bounced, copper is back to around $5,000." He added, on a bearish
note, "very short term, copper could easily re-trade to $6,000 but the view
medium term now has turned and talks of a fall back to pre-2006 levels at
$3,000 are being taken seriously." Basemetals.com analyst William Adams said
in a research note: "Overnight US futures, metals and Asian equities seem to
be taking an optimist attitude to the weekend's talks which saw the US Fed say
they would consider every option for restoring confidence, and in Europe there
seems to have been agreement to guarantee loans between banks, put money into
banks and defreeze credit markets."
He added: "All in all it looks like governments have realized that they have
to do whatever necessary to underpin the financial sector and keep money
flowing through the economy." The first trader said: "The market is pretty
clueless, it is very nervous." He added: "Who knows, have the producers done
enough, or any, hedging? Ccertainly some have put options in place -- they
have in part caused or made falls more volatile. Still, what if they have not
hedged? Then you can predict another quick fall lower." Aluminium was
indicated up $65 from Friday's kerb at 2,280/mt, lead was bid $57 higher at
$1,532/mt while nickel, the key alloy in stainless steel, increased $375 to
$12,550/mt in premarket business. Meanwhile, tin managed a $350 gain to
$14,400/mt and zinc was indicated up $38 at $1,478/mt. Looking at the alloys,
North American received no investor interest in early play while standard was
seen up $10 at $1,810/mt.
This commentary was first published in Platts Metals Alert. If you have any feedback about this commentary or want to find out more about Platts Metals products and services, please contact webeditor@platts.com.
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| This content first appears in Platts Metals
Alert. Platts Metals Alert is the metal industry's leading real-time data feed service. It provides continuous breaking Metals news from the editors of Platts Metals Week, a long-term global team of metals specialists dedicated exclusively to metals reporting, 24-hours-a-day. |
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