As we return to the office after a wet long weekend the good news is that Greece has finally stopped being reported in the financial press. Unfortunately they have been replaced with Spain. Having continually denied it needed a bailout, the Spanish Government decided they couldn’t say no to a $100 Billion of new loans to Spanish Banks.
Whilst it was expected the announcement would calm the markets, the opposite occurred with European stock markets falling sharply upon the news. Surprisingly the LME commodities were relatively steady, but a new level of uncertainty now hangs over the Eurozone.
**** China bull meets Spanish bear **** By Adam Carr – Business Spectator
Much has happened over our long weekend. Chinese data has bounced backed and in particular trade data was much stronger than expected with exports rising almost 16 per cent year-on-year, while imports rose 13 per cent year-on-year. Expectations had been for 7 per cent and 5 per cent. Then Chinese industrial production figures also showed solid growth, with rates up near 11 per cent (as expected). Finally, it looks like the Chinese love their cars and recent data shows car sales in China up some 22 per cent over the year. All good, dispelling fears over Chinese growth.
Then there was Spain. Events there have been especially interesting. Having consistently denied that a bailout was required – noting that the amounts required to recapitalise banks were not onerous (which they weren’t), Spain comes out over the weekend and says they will accept European aid.
**** Copper Locks In Gains on Spain Bailout **** By Tatyana Shumsky – DJ BASE METALS
NEW YORK–Copper futures ended higher Monday as investors breathed easier after Spain requested financial aid from the European Union. The most actively traded contract, for July delivery, rose 5.80 cents, or 1.8%, to settle at $3.3430 a pound on the Comex division of the New York Mercantile Exchange.
Copper futures had ended on a 2012 low Friday on worries that Spain, the fourth-largest economy in the euro zone, was struggling to prop up its bank system. These concerns were assuaged over the weekend after the Spanish government requested EUR100 billion ($125 billion) in rescue aid for the country’s banks.
“I don’t know if the bailout package is going to be big enough to save Spain. Europe is a big guessing game right now,” said Frank Lesh, broker and futures analyst with FuturePath Trading.
**** Goldman cuts 3-month price targets for base metals **** By N R Sethuraman – Reuters
U.S. investment bank Goldman Sachs on Monday lowered its 3-month price targets for base metals, citing weaker than expected consumption and a stronger U.S. dollar against the euro.
Recent trips across North America confirmed a near complete lack of conviction in the very short-term outlook for metals prices, with market participants generally paralysed by the banking and sovereign crisis in Europe, Goldman said.
Views on the outlook for Chinese metals demand in 2012 were polarized, with many expecting a continuation of weakness in the housing sector and policy easing, the bank added.
Goldman cut its 3-month price targets on copper to $8,000 per tonne, aluminium to $2,200 per tonne, nickel to $17,000 per tonne and zinc to $1,950 per tonne.
In the second half of 2012 Goldman expects the copper market to remain roughly balanced and aluminium to tighten at current prices as global supply growth remains constrained in a growing demand environment. It expects zinc and nickel to underperform in the second half of the year.