ET: London copper ticks up, quiet ahead of US vote
SINGAPORE: London copper futures rose 0.7 per cent on Tuesday, while Shanghai metal ticked lower, but trade is expected to be low-key across mark
ets ahead of the U.S. presidential election later in the day. Metals' direction likely to be steered by the dollar, which was steady against the euro at $1.2627 after falling as low as $1.2598 on Monday.
Analysts say a win by Democrat Barack Obama, who is leading his Republican opponent, John McCain, in most polls, could be marginally more positive for the dollar. "Markets have priced in an Obama win because of his lead in the polls. But if the Democrats win really big in the Senate and the House, we will see a sharp move in equity markets and by extension, commodities," said MF Global analyst Edward Meir.
"There are strong arguments for a rise or a fall -- bears make the case that additional spending may weigh -- but my feeling is that markets will move higher as a strong majority will allow the administration to pass legislation more easily."
London Metal Exchange copper for delivery in three months rose 0.7 percent or $30 to $4,120 but zinc ticked down $5 to $1,165. Nickel fell $95 to $11,900. Technically, nickel is in the middle of a $5,000 trading range, with little clear direction. "The retreat from resistance near $14,000 will retest the rally point support near $9,000," said Daryl Guppy, chief executive of Guppytraders.com. "Watch for consolidation and rebound rallies between $9,000 and $14,000.
The $16,000 level is significant long-term resistance but the bear trend suggests resistance near $17,500." Shanghai copper futures fell 1.7 percent to 32,040 yuan ($4,686), but zinc rose 0.9 percent to 9,530 yuan, having dropped by its 4 percent limit on Monday.
On Monday, Shanghai copper rose 3.8 percent and London metal gained 4 percent before ending slightly lower after data showed Chinese factory output shrank sharply in October and in the United States, the Institute for Supply Management said factory activity fell to 38.9 in October from 43.5 the previous month. But the muted response by investors to very weak numbers, which also included a plunge in auto sales, could signal the bottom of the sell-off.
"The markets are not buckling, even after the horrendous numbers from the United States. We didn't crash to new lows so maybe we have hit bottom," Meir said. Tin fell $200 to $14,300. Prices have bounced from a low of $10,300 a little over a week ago.
Despite that tin makers have joined the long list of metals producers who are slashing output in response to price falls of over 50 percent in the past few months. Yunnan Tin, China's top producer of the metal, said on Tuesday it would cut output by about 30 percent in the fourth quarter due to falling prices.
