mercredi 14 janvier 2015
Why Copper Slumped And Why It Will Remain Soft
Posted on 20:37 by nice news
Copper had a bad day yesterday. It slumped as much as 8.7% in London and fell to the daily trading limit in Shanghai and broke $5,500 per tonne. It was the largest daily fall since June 2010. The largest producer Jiangxi Copper (358.HK) was the most shorted stock in Hong Kong, ending 5.7% lower.
Why did copper retreat so quickly in one day?
Financial media (this blog included) pointed out that copper fell hours after the World Bank cut its global economic outlook. Copper is widely used throughout the economy, so its demand is often a good indicator of economic health, explained Bank of America Merrill Lynch‘s strategist David Cui. So traders could be selling copper after the World Bank report.
A second explanation is that copper was liquidity squeezed. “It’s possible that liquidity has been withdrawing from copper speculation and going into stock speculation,” noted Cui.
Going into the Chinese New Year, when demand tends to be weak and liquidity tends to be tight (companies close books and Chinese withdraw money from their bank accounts for the New Year celebration), copper will likely continue on its soft path. HSBC‘s analysts Jeff Yuan and Simon Francis wrote:
Why did copper retreat so quickly in one day?
Financial media (this blog included) pointed out that copper fell hours after the World Bank cut its global economic outlook. Copper is widely used throughout the economy, so its demand is often a good indicator of economic health, explained Bank of America Merrill Lynch‘s strategist David Cui. So traders could be selling copper after the World Bank report.
A second explanation is that copper was liquidity squeezed. “It’s possible that liquidity has been withdrawing from copper speculation and going into stock speculation,” noted Cui.
Going into the Chinese New Year, when demand tends to be weak and liquidity tends to be tight (companies close books and Chinese withdraw money from their bank accounts for the New Year celebration), copper will likely continue on its soft path. HSBC‘s analysts Jeff Yuan and Simon Francis wrote:
Why Copper Slumped And Why It Will Remain Soft
Categories: Why Copper Slumped And Why It Will Remain Soft
Inscription à :
Publier les commentaires (Atom)
0 commentaires:
Enregistrer un commentaire