Base Metals
Base metals on the LME traded lower yesterday as disappointing data from China stirred up concerns regarding serious weakness in the world’s biggest consumer. Industrial output and fixed asset investment data for August came in below consensus, reviving concerns about possibility China could fail to achieve a 7 percent growth target this year. Also, strength in the DX along with risk aversion in the global market sentiments acted as negative factors.
On the MCX, all the base metal prices traded negative in line with international trends.
Copper
LME Copper prices plunged by 1.1 percent on Monday as weaker-than-expected economic data out of China fuelled fears about slowing growth in the world's second biggest economy. Also, strength in the DX ahead of the FOMC statement exerted pressure on prices.
Further losses were cushioned as State-owned Assets Supervision and Administration Commission stated it will make more effort in reforming `zombie enterprises,' long-time loss-making enterprises, and in disposing of those low- efficient and non-performing assets. Also, decline of 0.3 percent in LME stocks supported gains.
MCX copper prices declined by 1.8 percent and closed at Rs.357.6/kg in line with international trends.
Outlook
We expect Copper prices to trade sideways today as investors remain cautious ahead of FOMC statement due Thursday. Also, investors will keenly await US retail sales data to be released tonight.
While on the other hand, China will work to reform its hugely inefficient public sector, making state-owned enterprises more subject to market forces and restructuring those that are performing poorly, while allowing some to close.
On the MCX, copper prices are expected to trade higher today owing to Rupee depreciation.
Contributed by Angel Broking
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