BLBG: Copper Drops a Second Day in N.Y. as Traders Await U.S. Action
Copper futures fell for a second day in New York as traders waited for U.S. action to boost the economy and revive the financial system.
The Senate may vote today on an economic stimulus plan valued at $838 billion, setting the stage for final congressional action. Treasury Secretary Timothy Geithner began laying out his plan to thaw the credit markets, saying in prepared remarks that stalled lending is “working against recovery.” Copper has plunged 62 percent from a record in May.
“People are waiting to see that the stimulus plan actually goes forward,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. “Copper is in a holding period right now.”
Copper futures for March delivery fell 3.3 cents, or 2 percent, to $1.58 a pound at 11:14 a.m. on the Comex division of the New York Mercantile Exchange. The price slumped 1 percent yesterday.
The metal also dropped today in line with equity markets, McGhee said. The Standard & Poor’s 500 Index fell for the first time in four days after President Barack Obama said last night that the world’s largest economy faces a “full-blown crisis” as the slump accelerates.
“This is not your ordinary, run-of-the-mill recession,” Obama said at his first prime-time news conference as president.
Geithner pledged a further round of capital injections for U.S. banks and an initiative to address so-called toxic assets weighing down the lenders. The U.S. is mired in the worst financial crisis since the Great Depression as credit markets have stalled and job losses have accelerated.
‘Better Hopes’
If the U.S. stimulus plan passes the Senate today, it may help stem the decline in copper prices on “some better hopes for the economy,” said Donald Selkin, the chief market strategist at National Securities Corp. in New York.
The House of Representatives passed a similar measure last month. Following passage by the Senate, the two plans would then be the subject of a bicameral conference to reconcile differences and create a single bill.
On the London Metal Exchange, copper for delivery in three months dropped $80, or 2.2 percent, to $3,500 a metric ton ($1.59 a pound). The price reached a record $8,940 on July 2.
