Copper steadies as stock market momentum stalls

LONDON — Copper steadied on Wednesday after two days of gains as stock markets slid after a series of record highs, pointing to a more cautious mood among investors. But a retreat in the dollar lifted the broader metals complex.

Copper hit a three-year high of $7,177 a ton earlier in October and moved back above $7,000 an ounce this week, but has struggled to maintain momentum as confidence in the broader economy lost steam.

“We had some very good economic data, equity markets at record highs, ( and) bond yields moving higher on the back of Trump’s proposed tax cuts, so the funds jumped in and used copper to express a positive macro view,” Societe Generale analyst Robin Bhar said.

“That took copper above fundamentally justified levels,” he noted.

“It’s going to continue to meet resistance around $ 7,000 and above and get rebuffed, but there will be dip buying by other specs and investors keeping it pretty stable.”

Three- month copper on the London Metal Exchange (LME) closed up 0.10% at $7,010 a ton. The metal moved up from an earlier low of $6,925 a ton as the dollar surrendered gains to turn lower.

Wall Street stocks fell after a barrage of lackluster earnings reports from companies, including AT&T and Boeing, weighed. The Dow had closed at another record high on Tuesday.

The copper market should see a deficit of 151,000 tons this year and a deficit of 104,000 tons in 2018, the International Copper Study Group said on Tuesday.

A private coal mining industry investor in Shanxi province is said to be the main actor behind a dramatic increase in bullish bets in Chinese copper futures.

A break below $ 7,009 could cause a loss into the range of $6,924-$6,944, according to Reuters technical analyst Wang Tao.

The premium of cash zinc over the three- month contract rose to $68.50, climbing back towards the 10-year high of $91 a ton it hit two weeks ago. That may indicate shortages in immediately available supply.

LME zinc closed at $3,191 a ton, up 0.40%, while lead ended the day 0.80% higher at $2,490 a ton.

Growing demand from batterymakers will exacerbate “the predicted structural shortage of nickel between now and 2025,” research house Wood Mackenzie said.

LME nickel finished down 1.10% at $11,865 a ton, aluminum closed 1.40% higher at $2,186 a ton, while tin ended up 0.60% at $19,890 a ton. —