Copper futures fluctuate on upbeat China, U.S. data, Fed stimulus outlook

Copper swung between gains and losses on Monday but traded mostly higher throughout the day after upbeat data from China released during the weekend suggested the Asian economy is likely to meet the governments economic growth target. However, recently arisen speculations the Federal Reserve might begin paring its monthly bond purchases earlier than expected limited gains.

On the Comex division of the New York Mercantile Exchange, copper futures for settlement in December traded at $3.251 per pound at 12:29 GMT, down 0.09% on the day. Prices shifted in a days range between session high of $3.276 and low of $3.250. The industrial metal snapped four days of declines on Friday and added 0.5% following the release of upbeat trade data from China but settled the week 1.3% lower.

Copper drew support after Chinas National Bureau of Statistics reported on Saturday consumer prices rose by the most in eight month in October, led by gains in food prices. According to the government agency, consumer inflation jumped by an annualized 3.2% last month, slightly up from September’s 3.1% advance. Despite trailing the median estimate of analysts surveyed by both Reuters and Bloomberg for a 3.3% surge, last month’s reading matched February’s 10-month high.

October’s consumer inflation advance was based on rising food prices which marked a 6.5% increase, the most since April 2012, following a 6.1% jump in September. Non-food costs remained unchanged at 1.6% from a month earlier. Transportation and communications prices declined by 0.6%, the most in four months.

The National Bureau of Statistics also reported that producer prices decelerated for a 20th consecutive month in October, the longest stretch since 2002. Year-on-year, China’s Producer Price Index fell by 1.5%, underperforming expectations for a drop by 1.4% from September’s 1.3% decline. On a monthly basis, producer inflation remained unchanged.

The Asian nation’s industrial production surprisingly expanded by 10.3% last month, defying analysts’ projections that factory output growth will decelerate to 10.0% after it jumped 10.2% a month earlier.

Meanwhile, retail sales rose by 13.3% in October, the same as in September, but trailed expectations for a 13.4% advance. Fixed-asset investment, a key driver for economic growth, matched expectations for a jump by 20.1% in the ten months through October, but were slightly lower than last year’s 20.2% increase during the comparable period.

Also fanning positive sentiment, China’s General Administration of Customs said on Friday the Asian nation’s exports rebounded above expectations in October after declining in September. Stronger global demand sent overseas shipments soaring by 5.6% last month, exceeding analysts’ projections for a surge of 3.2% from the previous month’s 0.3% decline.

Meanwhile, China’s inbound shipments rose at a slower-than-expected pace but still marked a healthy expansion. The Asian country’s imports rose by 7.6% in October, underperforming expectations for an advance of 8.5% but still marked an improvement from September’s 7.4% gain. The upbeat exports reading widened the nation’s trade balance surplus to $31.10 billion, compared to projections for a rebound to $23.90 billion from the preceding period’s plunge to $15.20 billion.

Chinese leaders, including President Xi Jinping and Premier Li Keqiang, began a four-day meeting on Saturday to set a reform agenda for the next decade. China’s government pledged to run tough economic reforms in order to make economic growth less dependable on foreign investment and shift it to domestic consumption-based. Investors are awaiting the conclusion of the meeting on Tuesday.

Fed stimulus outlook

Market sentiment however was damped after a recent string of unexpectedly positive economic data from the U.S. spurred speculations the Federal Reserve could begin trimming its monthly bond purchases earlier than previously projected. The latest proof that the U.S. economic recovery seemed sustainable came by the Labor Departments report on Friday which showed U.S. job growth unexpectedly accelerated in October from a month earlier, signaling U.S. employers overall ignored the 16-day government shutdown in October and remained optimistic over the nation’s economic recovery.

U.S. non-farm payrolls surged by 204 000 in October, exceeding the median estimate of 91 economists surveyed by Bloomberg for a 120 000 advance. The private sector accounted for all of the jobs gain last month as government payrolls fell by 8 000. September’s reading received an upward revision to 163 000 jobs opened, up from initially estimated at 148 000, while August’s payrolls were revised up by 45 000, signaling the U.S. labor market had gained momentum prior to the fiscal deadlock.

A day earlier, data by the Commerce Department showed U.S. GDP (Gross Domestic Product) growth surged 2.8% in the three months trough September, the most in a year, defying analysts’ projections for a drop to 2% from the preceding quarter’s 2.5% expansion.

Kazuhiko Saito, an analyst at commodities broker Fujitomi Co. in Tokyo, commented for Bloomberg: “While the market was absorbing the latest economic data from China and the U.S., investors were assessing the timing of the Fed’s stimulus cut and watching the conclusion of China’s party meeting tomorrow.”