Welcome to the 2013 Financial Year, a rally in the Commodity markets over the last week has given us much to celebrate but the carbon tax means we can only afford candles. The 2012 Financial year was a year of huge volatility, with the Greece debt problems resurfacing week in and week out as either a solved solution or as a doomsday problem. The movie Groundhog Day seemed a very apt description. It was also a year in which the US debt ceiling showdown was resolved by the “sensible” option of allowing the Government to borrow more debt, which would make us think that the issue could reappear again in 2013.
On Friday we heard that the Eurozone had formed a policy agreement which involves new banking supervision rules and the implementation of the new bailout fund, the European Stability Mechanism (ESM). Copper then jumped up USD300 (4%) and the AUD/USD rose over 2 cents. Weak US Manufacturing data last night is expected to keep a lid on any further Commodity price rises.
**** DJ BASE METALS: LME Metals Close Mixed; Data Weigh On Sentiment ****
–Base metals close mixed; copper 0.8% lower at $7,625/ton –Little impetus to push prices higher after Friday’s rally, say brokers –Manufacturing data from U.S., China and Europe disappoint markets
By Francesca Freeman
Base metals closed mixed on the London Metal Exchange Monday, pressured by profit-taking after the previous session’s rally and investor nervousness following a swathe of weak manufacturing data. ”There has been no impetus to push prices higher,” said a London-based broker, noting the role of short-covering in Friday’s rally and the hesitance of investors to add new long positions to base metals Monday.
Copper surged 4.1% to a one-month high at $7,691/ton Friday amid broad market gains after euro-zone leaders agreed to grant troubled banks direct access the region’s bailout funds. Monday saw the red metal’s rally stall, however, as investors cashed in on the previous session’s gains and weak economic data weighed on sentiment. In the U.S., factory activity contracted unexpectedly in June, with the ISM manufacturing index moving to 49.7 from May’s 53.5. The news followed weak manufacturing figures from the euro zone and China.