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What's Moving the Market?
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20r -Oc-ob
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Another weekend of deepening uncertainty in the markets provoked by the
continuing global economic crisis saw prices on the London Metal Exchange's
base metals complex come crashing further down Monday morning. The FTSE 100
leading share index was down by over 5% Monday morning, with banking shares
leading the rest of the index lower as the current log-jam in lending shows no
sign of easing. Germany followed Ireland's lead by offering its savers a
guarantee covering all deposits over the weekend, putting further pressure on
other EU governments to do the same. Oil prices also suffered, dipping down
below $90 for the first time in on the back of fears about a global slowdown
in growth and the dollar maintained its strength Monday, up on gold with Eur1
buying $1.3565 at 0948 GMT. "We are at the whim of equities," said a trader
contacted by Platts. "Fresh short selling has driven things down, people are
moving money into the complex on the back of falling prices."
In a market so determined by wider economic factors, fundamentals have slipped
off the radar according to the trader who said that until equities settle
down, the complex will not be able to move to its own beat. "Despite the
uptick at Friday's close, events around the world over the weekend have seen
the market crash down," said the trader. "We are not going to be going in any
direction here until the equities markets settle down. Until then we don't
have a chance of knowing what's going to happen," Basemetals.com analyst
William Adams echoed this sentiment in his daily research note Monday. He
said: "Given the markets' negative reaction to the bail out plan it may be
that central banks now start to cut interest rates again which could give the
market a shot of adrenaline. If this coincides with a turn down in the dollar
then there may well be room for a short-covering rally in the metals...
especially so given the fresh lows last week."
Bellwether contract copper was down $25 from its previous close, bid at
$5,585/mt at 0855 GMT. Aluminium saw a more perceptible slide, down $79 from
the end of Friday's session, bid at $2,260/mt. Lead dipped down $30, bid at
$1,690/mt and nickel lost $625 in early trade, sliding down to $14,525/mt. Tin
came off by $250, seen at $16,755/mt Monday morning and zinc dropped $39, bid
at $1,541/mt. The standard alloy contract saw $100 shaved off its last traded
price, down at $1,900/mt and North American Alloy saw no bids in early trade
Monday. "All in all while the US bailout package is implemented the markets
are likely to remain nervous," concluded Adams. "But with other support coming
in from other economies and with potential for rate cuts to be announced too,
both shorts and longs are both likely to be nervous. Overall we expect very
volatile trading ahead."
This commentary was first published in Platts Metals Alert. If you have any feedback about this commentary or want to find out more about Platts Metals products and services, please contact webeditor@platts.com.
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| This content first appears in Platts Metals
Alert. Platts Metals Alert is the metal industry's leading real-time data feed service. It provides continuous breaking Metals news from the editors of Platts Metals Week, a long-term global team of metals specialists dedicated exclusively to metals reporting, 24-hours-a-day. |
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