BLBG: Copper Drops in Asia as Recovery Optimism Fades, Equities Fall
Copper, the best performer on the London Metal Exchange this year, dropped for a second day as investors’ optimism about an economic recovery faded, hurting the outlook for metals demand.
Futures fell as equities declined after a report today showed Japan’s industrial production shrank for a fifth month in February, adding to evidence that the global recession is deepening. A stronger dollar also curbed investors’ demand for commodities, according to Great Wall Futures Co.’s Li Rong.
“The outlook for the global economy is still gloomy despite the rally in equities last week,” Great Wall analyst Li said today from Shanghai. “I doubt the quick turnaround that so many out there seem to be hoping for is going to happen.”
Copper for three-month delivery fell as much as 1.8 percent to $3,976.25 a metric ton in early Asian trading, and stood at $4,015 a ton at 9:52 a.m. Singapore time. The metal had gained 2.4 percent last week as the MSCI Asia Pacific Index advanced.
May-delivery copper on the Comex division of the New York Mercantile Exchange lost as much as 1.7 percent to $1.804 a pound. Copper for June delivery on the Shanghai Futures Exchange declined as much as 0.4 percent to 33,100 yuan ($4,843) a ton, before trading at 33,020 yuan.
The U.S. dollar index, which tracks the dollar against the currencies of six major trading partners, gained for a third day today ahead of the Bank of Japan’s Tankan survey and the European Central Bank rates meeting this week. Commodities can decline as the dollar strengthens.
Equities Drop
The benchmark MSCI Asia Pacific Index slipped today for the first time in six days on speculation a recovery for banks will be delayed after U.S. Treasury Secretary Timothy Geithner said some financial institutions will need substantial government aid.
JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said March was a “little tougher” than January and February for the bank, while Bank of America Corp.’s CEO Kenneth Lewis said the lender’s trading book wasn’t as good as in the first two months.
Among other LME-traded metals, aluminum fell 0.2 percent to $1,417 a ton, zinc lost 2.2 percent to $1,320 a ton, and lead slid 1.2 percent to $1,265 a ton. Nickel and tin hadn’t traded as of 9:55 a.m. in Singapore.
