WSJ: Comex Copper Slips to Three-Week Low on Fiscal Cliff Worry, U.S. Data
--Comex March copper recently down 6.9 cents, or 1.9%, at $3.5365 a pound
--"Mood swing" in fiscal cliff talks limits expectations for a deal, pressures copper
--Copper extends losses after U.S. data as traders gauge impact on stimulus duration
By Matt Day
NEW YORK--Copper futures slumped to a three-week low Thursday, falling for a fourth consecutive session on stalled U.S. "fiscal cliff" talks and the view that upbeat economic data may limit the duration of stimulus measures.
Traders are concerned that the pending package of U.S. government spending cuts and tax increases set to take effect in January may drag the country into recession. That would likely limit demand for copper from the world's No. 2 consumer, behind China. Copper, used in infrastructure and construction, as well as a wide range of manufactured products, is sensitive to shifts in the economic outlook.
The most actively traded copper contract, for March delivery, recently traded down 6.9 cents, or 1.9%, at $3.5365 a pound on the Comex division of the New York Mercantile Exchange. Futures early on Thursday fell as low as $3.523 a pound, the lowest intraday price since Nov. 28.
Following some initial optimism early this week, a "palpable mood swing" has descended over talks to avert the U.S. "fiscal cliff," INTL FCStone analyst Edward Meir said in a note. Talks between Congressional Republicans and the White House stalled, with the House of Representatives set to vote on an alternate plan that U.S. President Barack Obama has said he would veto.
"All this political gamesmanship does not serve any purpose other than to destabilize the markets and sap consumer confidence even further," Mr. Meir said.
Through Wednesday, copper was still up about 4% in 2012, and some investors holding winning bets have cashed out in recent weeks as cliff talks dragged on. Failure to arrive at a deal would bring higher taxes on investment income for U.S. investors.
Copper extended its losses Thursday after data showed the U.S. economy expanded faster than previously thought during the third quarter. Weekly U.S. unemployment data underlined a trend of a slowly improving labor market.
The set of upbeat U.S. data limited expectations for the duration of the Federal Reserve's stimulus measures, traders said.
