The base metal complex traded in a jittery mood on the previous day’s as the market was fully directed by the global equities and fall in dollar index for the first time during this week. After witnessing a weaker trade in Asian hours, prices rose in the European hours due to ECB announcement and then again saw some fall in the evening session. However, prices finally settled on a higher note on short covering-- despite the weak American equities and rebounding dollar index
EUR recovered slightly on reports that Hungary seeks to extend existing credit line agreement with IMF, which would boost confidence in Hungary's financial markets. ECB released 131.9 billion euro loan to the banks, which strengthened the European equity markets and the currency against the dollar
On the fundamental front, Japan's refined copper exports fell 19% in May from a year earlier to 49,248 tonnes, with China's share shrinking to 41% from nearly half in April, Ministry of Finance data stated. The drop was in line with recent Chinese data that showed China's arrivals of refined copper fell 9.7% in May from April in their second straight monthly drop, while on a daily basis, accounting for May being a longer month, imports fell almost 13%
Outlook
As per the Federation of Logistics and Purchasing body, China’s Purchasing Managers’ Index fell to 52.1 from 53.9 in May-- less than the median 53.2 estimate in a Bloomberg survey. China’s government has told banks to set aside more money as reserves, and cracked down on property speculation. Clamping down on local-government borrowing to contain risks from last year’s explosion in debt could also limit growth
As per the Federation of Logistics and Purchasing body, China’s Purchasing Managers’ Index fell to 52.1 from 53.9 in May-- less than the median 53.2 estimate in a Bloomberg survey. China’s government has told banks to set aside more money as reserves, and cracked down on property speculation. Clamping down on local-government borrowing to contain risks from last year’s explosion in debt could also limit growth
Day ahead, market looks forward for a host of significant data releases from the US. The German and Euro-zone PMI manufacturing activities are showing no change to prior levels at 58.1 and 55.6 respectively. Later in the evening, the US is due to release the initial jobless claims for the week ending June-26, rising by 3,000 while the continuing claims for the week ending June-19 rising by 22,000. The ISM manufacturing and services paid are declining to 59 and 72 respectively for he June month. Moreover, the construction spending is falling to -0.60% from the rise of 2.70% in April month. Finally after a spate of fall in housing starts and building permits in the early parts of the month, the pending home sales for May month are declining by -15.20% from the prior of 6.00% growth. All the data releases are expected to be negative for the US economy and thus pressurize base metals to wade low
The Asian markets run low after the Wall Street ended in negative territories, on the previous day. Asian equities headed for a third day of losses which signals a bearish outlook for the recovery in economy
We from KCTL expect MCX metals complex to instill a gap down opening as the electronic session at LME runs modest low. The Indian Rupee turning directions intermittently disturbs the parity with international counterparts. China’s growth is off the peak and will gradually cool while fall in PMI activities would weaken the demand for base metals from the largest consuming nation. The day’s trade is marked by a host of disconcerting data releases that might trigger sell-off in the market. Overall the view stands bearish for the day and we recommend being on the sell side.
