Healthy economic news and developments in the U.S. pushed up copper futures on Thursday as the base metal achieved gains of at least 1 percent, according to Reuters.
The outlook for demand rose as housing and labor market data also enhanced optimism. The industrial metal is sensitive to financial and economic news due to its myriad uses in construction, manufacturing and additional industry.
Unemployment claims in the nation hosting the globe’s largest economy last week dropped to their lowest in five years. December saw construction of residences sharply increase, indicating that the country’s housing market will aid the recovery from the Great Recession.
“The way things are going at the minute, the U.S. housing market looks to be one of the best parts of the U.S. economy,” commodities research head Nic Brown with Natixis told Reuters on Thursday. “It looks to us like a large inventory cycle is finally turning in favor of a tighter U.S. housing market which therefore requires more new houses to be built. It’s a cycle which will boost activity and boost credit creation.”
At 11:53 a.m. on Thursday, copper futures rose 1.55 percent, a 0.056-cent increase to $3.66 per pound.
Debt ceiling discussion
The reddish metal achieved sharp gains early this month in the aftermath of U.S. political leaders successfully negotiating terms to stave off passage over the fiscal cliff, the automatic tax hikes and spending cuts amounting to more than $600 billion that would have kicked in with the dawning of the new year.
Yet some analysts are closely monitoring the reddish metal to gauge its reaction to the onset of negotiations regarding the debt ceiling.
The U.S. Federal Reserve is poised to close its monetary easing program earlier than anticipated.
Until those negotiations do heat up, the industrial metal is responding positively to U.S. economic data.
Housing starts rise
The Wall Street Journal reports home building in the U.S. during the final month of last year achieved its top gain since 2008, according to the U.S. Department of Commerce.
Those gains rose to 12.1 percent in December, notching the highest level since July 2008.
The metal also is sensitive to U.S. developments since the nation is its second-largest consumer.
Stronger data in the top consumer also benefited the reddish metal.
Optimism for Chinese data
The Asian nation is set to release economic data on Friday, which are likely to impact copper futures.
China saw some rough economic times last year yet as of late appears to be bouncing back. It also hosts the globe’s second-largest economy, trailing only that of the U.S.
The economic data that China is slated to release later this week included information about gross domestic product from the final quarter of last year, generation from industry and retail sales.
Chinese consumption accounts for roughly 40 percent of the globe’s supply of copper.
“We remain mildly bullish for the base metals on the back of recovery hopes in China,” research head William Adams with metals research service FastMarkets told The Wall Street Journal on Thursday. “Tomorrow’s data from there may well set the tone for next week.”
Bloomberg reports one analyst said demand for the base metal is poised to sharply climb as a result of both the U.S. and Chinese economies’ growth.
Economists polled by the news service predicted the gross domestic product of China from the fourth quarter will be larger than that of the fourth quarter of 2011.
“Recent data showed the two economies are accelerating,” analyst He Shan with Galaxy Futures Co. told the news source on Thursday. “These data are helping to underpin copper prices even as we’re about to see a strong growth in supplies.”
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