Asian markets to remain under pressure as international markets fall
City Index May 18, 2012 5:40 PM
<p> Asian markets will again be under pressure given weak offshore leads – both from Europe and the United States. Copper remains a very good […]</p>
Asian markets will again be under pressure given weak offshore leads – both from Europe and the United States.
Copper remains a very good lead indicator for the health of all other metals and industrial commodities overall. It hasn’t completely fallen out of bed, but is going through a downward trend.
It last traded at around US$3.48/lb after falling out of the US$3.60-65/lb range where it previously held support. The next big support level is around the US$3.30/lb level but it hasn’t slipped far enough yet to test that level. This might contain some of the selling on material stocks today through Asia, although sentiment is still very bearish.
News that Chinese steel mills have started turning back iron ore shipments from major mining groups should be taken in context – China wants to drive down the iron ore price as much as possible since it is a major customer.
The news though will do little to help offset bearish sentiment in the major Australian iron ore producers – BHP, Rio Tinto and Fortescue Metals.
These three companies, because of their size, are statistically significant to the ASX200 index with BHP being the largest stock among all other constituents.
The Australian dollar slipped below 99 US cents to last trade at 98.84. The Euro last traded at 126.92 against the dollar while the dollar yen slipped back below 80 to last settle at 79.37.
Gold staged a slight rally overnight, from very low levels, to last settle at US$1573/oz. The rally is unlikely to break the recent downward trend.
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