Futures Market News
Chinese economic data tugs at copper futures
Aug 10, 2012 03:04 PM
Copper futures' weekly gains were slashed by the industrial metal's losses on Friday, which were prompted by sharp reductions to export growth in the globe's top consumer of the reddish metal, according to Bloomberg.
Exports of copper from China, also the globe's second-largest economic system, advanced only 1 percent during the month of July as compared to the same period of 2011. Analysts with Bloomberg had forecast the advance would be 8 percent so the economic data released by the Asian nation's customs bureau served as a disappointment.
Economic data released on Thursday indicates industrial production and retail sales in China were slower than predictions.
"Chinese trade data points to a harder landing than originally thought, prompting a renewal of pessimistic sentiment on China, which is clearly weighing on metals," states an email authored by analyst David Wilson with Citigroup in London to Bloomberg.
At 1:41 p.m. on Friday, copper futures dropped 0.93 percent, a 0.032 cent loss to $3.393 per pound.
Weekly gains reduced
The poor performance of copper futures as a consequence of the Chinese economic data on Friday pulled down this week's gains to 0.2 percent.
China accounts for as much as 40 percent of the globe's demand for the reddish metal, which is sensitive to economic and financial developments throughout the world due to its myriad uses in construction, manufacturing and additional industry.
The economy of the Asian nation, which trails only that of the U.S., has endured many hiccups this year. It presently is driving toward a seventh consecutive quarter of constriction, which might soon prompt the People's Bank of China to slash reserve requirements of lenders, according to Greater China economics head Lu Ting with Bank of America in Hong Kong. The country also might be driving toward an interest rate slash, Ting's note states.
Investors' eyebrows rise
Concerns are growing about future Chinese demands for copper, according to Reuters.
Though China saw imports of the reddish metal gain during the month of July, challenging economic circumstances in the Asian nation gained more attention.
One analyst noted China might be barreling toward a "hard landing."
"It looks like China's heading for a slightly harder landing maybe. That seems to be how the market's interpreting it, not looking just at the metal-specific trade data but the wider trade picture," analyst David Wilson with Citigroup told the news source.
Additional concerns about Asian nation
Also of concern to China's economic tableau is lending data being on the wane, according to The Wall Street Journal.
The country's trade surplus during the month of July constricted, according to economic data released on Friday. The data revealed losses to development and growth for both imports and exports.
Chinese banks' loan totals dropped to their lowest rate since September of last year though the central bank attempted to ease the process of credit acquisition for businesses.
Concerns are mounting about the Asian country's economy being impacted detrimentally by the sovereign debt crisis tearing through 17-nation euro bloc.
Reductions to the pace of growth in China thus far this year have fueled conjecture that leaders in Beijing were poised to implement strong measures to spur the economy.
However, officials have been apprehensive about standing behind spending measures out of fears of preserving the economy as it recovers from the financial crisis of 2008.
"Given the reluctance from the central government to boost [the economy], this year's recovery could be modest or weaker than previous years," states a note penned by analysts with Deutsche Bank, according to The Wall Street Journal.
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