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Copper futures rally 1% in risk-on trade

Published 10/31/2012, 06:06 AM
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Investing.com - Copper futures were higher for the second consecutive day on Wednesday, as U.S. markets prepared to reopen following a two-day closure for Hurricane Sandy, while market players waited for key Chinese manufacturing and U.S. employment data later in the week.

On the Comex division of the New York Mercantile Exchange, copper futures for December delivery traded at USD3.548 a pound during European morning trade, jumping 1.2%.

Earlier in the day, prices rose by as much as 1.4% to hit a session high of USD3.555 a pound. On Monday, futures fell to USD3.482 a pound, the cheapest level since September 5.

U.S. markets were set to reopen Wednesday, after remaining closed the previous two days, as Hurricane Sandy caused major damage in the U.S. northeast.

Copper traders were looking ahead to a series of important political and economic events set to unfold in early November.

On Thursday, China will release a report on manufacturing data for October, followed by closely-watched U.S. non-farm payrolls data on Friday.

Political developments were likely to take center stage next week, with the U.S. presidential election on November 6 and the start of the Chinese Communist Party Congress on November 8, where a once-in-a-decade leadership change was to take place.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

Meanwhile, euro zone developments remained in focus. Finance ministers from the region were to hold a conference call later in the day to discuss Greece’s progress on meeting austerity targets, but no decision on when the country will receive the next tranche of its bailout was expected.

Investors continued to await any sign that Spain is preparing to request a bailout, which would activate a bond purchasing program by the European Central Bank, aimed at lowering the borrowing costs of distressed euro zone states.

The debt-strapped country has been reluctant to ask for aid from its euro zone partners because of concerns it may come with conditions on its budget.

Copper prices have been under heavy selling pressure in recent sessions, losing nearly 7% since touching a four-month high of USD3.838 in mid-September, as increasing concerns over the outlook for global economic growth and the impact on future demand prospects dampened the appeal of the commodity.

Copper is sensitive to the economic growth outlook because of its widespread uses across industries.

Elsewhere on the Comex, gold for December delivery rose 0.4% to trade at USD1,718.85 a troy ounce, while silver for December delivery rallied 1.1% to trade at USD32.16 a troy ounce.

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