Copper rallied today, as China released data showing a higher-than-expected GDP growth in the worlds biggest consumer of the metal. This comes a day after copper reached the lowest price level in three weeks. Still, growth in China for the first quarter is the lowest in 18 months, pressuring the red metal.
On the COMEX division of the New York Mercantile Exchange, copper futures for settlement in May traded at $3.0095 per pound at 12:15 GMT, rising by 0.74% for the day. Prices shifted in a daily range between $3.0135 and $2.9815. Yesterday copper futures fell to a three-week low of $2.9655 – the lowest price in three weeks, and settled at $2.9875, marking the biggest one-day drop in a month.
China’s National Bureau of Statistics reported early on Wednesday that the country’s Gross Domestic Product (GDP) rose by an annualized 7.4% rate in the three months through March, the slowest in six quarters. Albeit beating analysts’ expectations for a slowdown to 7.3%, the reading trailed Q4′s 7.7% growth and was below the government’s targeted 7.5% expansion. Quarter-on-quarter, the Asian economy matched projections and grew by 1.4%, below the preceding period’s 1.8% growth.
Also fanning negative sentiment, China’s industrial output fell short of expectations and registered at 8.8% on annual basis, compared to anticipations for a 9.0% expansion.
Retail sales partially offset the bad news by rising by an annualized 12.2% pace, compared to expectations for a 12.1% jump from February’s 11.8%, though the fixed assets investment growth slowed pace to the weakest for a first quarter since 2009. It registered at 17.6%, below the 18.1% forecast, trailing the preceding periods 17.9% growth, signaling tight credit and softening demand.
Stephen Green, head of Greater China research at Standard Chartered Plc in Hong Kong, said for Bloomberg: “All the forward-looking indicators are weak – growth is going to continue to slow… We expect a mix of moderate monetary easing over the next few months and more aggressive reform measures.”
On Tuesday, the Peoples Bank of China reported that money supply grew at the slowest rate on record, fueling fears of a larger-than-expected slowdown. The Chinese M2 Money Stock rose at an annualized 12.1% pace, failing to meet analysts’ projections for 13.0% growth, down from the preceding period’s 13.3%.
Market players now looked ahead at the release of housing and industrial production data from the United States. Separate reports are expected to show a rise in housing starts in March and a minor decline in the issuance of building permits. Statistics will also likely show a second straight monthly expansion in industrial production, by 0.5%, after activity in the sector contracted by 0.3% in January.
Technical view
According to Binary Tribune’s daily analysis, in case Copper May futures manage to breach the first resistance level at $3.0345 per pound, they will probably continue up to test $3.0815. In case the second key resistance is broken, the industrial metal will likely attempt to advance to $3.1160.
If the contract manages to breach the first key support at $2.9530, it may continue to slide and test $2.9185. With this second key support broken, the movement to the downside will probably continue to $2.8715.
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