Copper futures eased down during European morning trade on Thursday,
after Italy saw borrowing costs rise to the highest level since December
at a debt auction earlier in the day.
Mounting concerns over rising borrowing costs in Spain and weekend elections in Greece, which could determine the course of the country’s future in the euro zone, further weighed.
On the Comex division of the New York Mercantile Exchange, copper futures for July delivery traded at USD3.336 a pound during European morning trade, easing down 0.1%.
It earlier fell by as much as 0.5% to trade at a session low of USD3.313 a pound.
Italy’s Treasury sold EUR3.0 billion worth of three-year government bonds at an average yield of 5.300% earlier in the day, the highest since December and up sharply from 3.910% at a similar auction last month.
Demand strengthened slightly, with bids exceeding supply 1.59 times versus a "bid-to-cover" ratio of 1.52 in May.
Italy’s Treasury planned to sell between EUR2.75 billion and EUR4.50 billion of government bonds Thursday.
The yield on Italian 10-year bonds stood at 6.29% following the auction, up from 6.26% hit Wednesday.
Meanwhile, growing concerns over rising borrowing costs in Spain, as well as jitters ahead of weekend elections in Greece continued to dominate market sentiment.
Late Wednesday, ratings agency Moody’s downgraded Spain’s sovereign-debt rating to Baa3 from A3, while placing the country on review for a possible further downgrade.
The downgrade by Moody’s followed a similar move earlier Wednesday from Egan-Jones, which lowered its rating on Spain to CCC+ from B.
Yields on Spanish 10-year bonds pushed higher in early trade Thursday, hitting 6.99%, a euro-era record high and just below the critical 7%-level, which led Greece, Portugal and Ireland to seek financial rescue packages.
Spain became the fourth euro zone nation to seek a rescue over the weekend. Some investors fear it is only a matter of time before Italy becomes the next country to ask for help.
Investors were also focused on the outcome of Sunday’s closely watched general election in Greece, where pro and anti-bailout parties are neck-and-neck in the polls.
Europe as a region is second in global demand for the industrial metal. Prices have tracked investor sentiment toward the euro zone’s debt crisis in recent months.
Copper prices have been on a rapid decline since the start of May, amid growing fears over an escalating debt crisis in the euro zone and a deeper-than-expected slowdown in China.
A deeper slowdown in China, the world’s second biggest economy, would impair a global expansion that is already faltering because of debt crisis in the euro zone.
Credit Suisse and Deutsche Bank both reduced forecasts for China’s growth this year as weakness in exports and in investment drag on the world’s second biggest economy.
Credit Suisse reduced its estimate to 7.7% from 8%, while Deutsche Bank lowered its forecast to 7.9% from 8.2%. The predictions indicate the weakest growth since 1999 and compare with a 9.2% expansion last year.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Elsewhere on the Comex, gold for August delivery eased up 0.1% to trade at USD1,620.65 a troy ounce, while silver for July delivery dipped 0.2% to trade at USD28.89 a troy ounce.
Asad Khan
Financial Analyst (CFB)
050-8774861
asad@cfb.ae
Mounting concerns over rising borrowing costs in Spain and weekend elections in Greece, which could determine the course of the country’s future in the euro zone, further weighed.
On the Comex division of the New York Mercantile Exchange, copper futures for July delivery traded at USD3.336 a pound during European morning trade, easing down 0.1%.
It earlier fell by as much as 0.5% to trade at a session low of USD3.313 a pound.
Italy’s Treasury sold EUR3.0 billion worth of three-year government bonds at an average yield of 5.300% earlier in the day, the highest since December and up sharply from 3.910% at a similar auction last month.
Demand strengthened slightly, with bids exceeding supply 1.59 times versus a "bid-to-cover" ratio of 1.52 in May.
Italy’s Treasury planned to sell between EUR2.75 billion and EUR4.50 billion of government bonds Thursday.
The yield on Italian 10-year bonds stood at 6.29% following the auction, up from 6.26% hit Wednesday.
Meanwhile, growing concerns over rising borrowing costs in Spain, as well as jitters ahead of weekend elections in Greece continued to dominate market sentiment.
Late Wednesday, ratings agency Moody’s downgraded Spain’s sovereign-debt rating to Baa3 from A3, while placing the country on review for a possible further downgrade.
The downgrade by Moody’s followed a similar move earlier Wednesday from Egan-Jones, which lowered its rating on Spain to CCC+ from B.
Yields on Spanish 10-year bonds pushed higher in early trade Thursday, hitting 6.99%, a euro-era record high and just below the critical 7%-level, which led Greece, Portugal and Ireland to seek financial rescue packages.
Spain became the fourth euro zone nation to seek a rescue over the weekend. Some investors fear it is only a matter of time before Italy becomes the next country to ask for help.
Investors were also focused on the outcome of Sunday’s closely watched general election in Greece, where pro and anti-bailout parties are neck-and-neck in the polls.
Europe as a region is second in global demand for the industrial metal. Prices have tracked investor sentiment toward the euro zone’s debt crisis in recent months.
Copper prices have been on a rapid decline since the start of May, amid growing fears over an escalating debt crisis in the euro zone and a deeper-than-expected slowdown in China.
A deeper slowdown in China, the world’s second biggest economy, would impair a global expansion that is already faltering because of debt crisis in the euro zone.
Credit Suisse and Deutsche Bank both reduced forecasts for China’s growth this year as weakness in exports and in investment drag on the world’s second biggest economy.
Credit Suisse reduced its estimate to 7.7% from 8%, while Deutsche Bank lowered its forecast to 7.9% from 8.2%. The predictions indicate the weakest growth since 1999 and compare with a 9.2% expansion last year.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Elsewhere on the Comex, gold for August delivery eased up 0.1% to trade at USD1,620.65 a troy ounce, while silver for July delivery dipped 0.2% to trade at USD28.89 a troy ounce.
Asad Khan
Financial Analyst (CFB)
050-8774861
asad@cfb.ae
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