IV:Copper futures trade near 9-week low amid Italy political chaos
Investing.com - Copper futures were lower during European morning hours on Tuesday, trading near the lowest level since December amid concerns that Italian election results could threaten economic reforms and reignite financial instability in the euro zone.
On the Comex division of the New York Mercantile Exchange, copper futures for May delivery traded at USD3.547 a pound during European morning trade, down 0.4% on the day.
New York-traded copper prices fell by as much as 0.7% earlier in the day to hit a session low of USD3.536 a pound. Comex copper prices fell to USD3.525 last Friday, the weakest level since December 20.
Italy’s center-left coalition, led by the Democratic Party's Pier Luigi Bersani, won the majority of votes in the lower house and was likely to receive the mandate to form a government.
However, projections indicated that no party would be able to form a majority in the upper house, leading to a deadlock.
The news prompted investors to shun riskier assets such as stocks and commodities and move in to safe-haven assets like the U.S. dollar and Treasuries.
Copper prices came under additional pressure amid concerns that China may step up monetary tightening efforts in the near-term.
A front-page commentary in China Securities Journal said the country may tighten monetary policy because of excessive liquidity in the market and rising property prices.
China's central bank conducted CNY5 billion of 28-day repo operations earlier Tuesday in an effort to drain excess liquidity.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Copper traders were also worried about impending sharp automatic U.S. spending cuts of USD85 billion, known as sequestration, due to take effect on March 1 unless Congress and the White House find a way to reach an agreement.
Market participants now looked ahead to a congressional testimony from Federal Reserve Chairman Ben Bernanke later in the trading day for further clues on the future of U.S. economic stimulus.
Commodity markets were rattled last week after the minutes of the Fed’s January meeting showed that policymakers discussed the slowing or stopping of USD85 billion in monthly bond purchases even before the job market improves.
Elsewhere on the Comex, gold for April delivery rose 0.65% to trade at USD1,597.10 a troy ounce, while silver for May delivery shed 0.3% to trade at USD28.96 a troy ounce.
