WSJ: Copper Hits 2-Month High on Upbeat U.S. Jobs Reports
By MATT DAY
NEW YORK—Copper futures rose to their highest level in more than two months as a pair of better-than-expected readings on the U.S. labor market lifted the demand outlook for the industrial metal.
The most actively traded copper contract, for September delivery, was up 5.9 cents, or 1.4%, to $4.3940 a pound in early trade on the Comex division of the New York Mercantile Exchange.
The contract had reached $4.3965 a pound, the highest intraday price since April 25, following a Labor Department report that new claims for unemployment benefits fell for the first time in three weeks, easing by 14,000 during the week ended July 2. The decline was larger than the expected drop of 3,000.
A separate report, published by Automatic Data Processing Inc. and consultancy Macroeconomic Advisors, said the private sector added 157,000 jobs last month, well above economists' expectations for a gain of 95,000.
While the reports don't represent a dramatic shift in the persistently weak U.S. labor market, traders viewed the data as a sign that Friday's monthly government employment report may come in better than expected.
Copper is sensitive to the economic outlook because of its widespread use in construction and manufacturing. Unemployment is viewed as an indicator of the health of the U.S. economy, as new hiring has lagged even while corporate profits recover from recession levels.
"Renewed optimism about a global economic recovery brings in the bulls," traders with RBC Capital Markets said in a note.
Goldman Sachs said Thursday that copper prices should see a strong second half of the year, citing expectations for a "moderate re-acceleration in global economic growth."
"We expect this demand growth will be sufficient to substantially tighten the copper market over the next year, especially as Chinese buyers continue to return to the market," Goldman analysts said.
Morgan Stanley analysts also reiterated their bullish view on the metal in a report late Wednesday, highlighting constraints in global mine production and the likelihood that Chinese consumers will have to buy to restock depleted inventories.
