AAP reported that base metals closed mostly moderately higher on the London Metal Exchange after a mixed session and a muted reaction to hotly anticipated comments from US Federal Reserve Chairman Mr Ben Bernanke leaving market watchers concerned that there may be little to push prices out of current ranges in the foreseeable future.
At the PM kerb close on Friday, LME three month copper closed 0.7% higher at USD 7,615 per tonne. The metals initially slumped on disappointment that Mr Bernanke did not specifically lay out details for the central bank's next monetary policy undertaking. However, prices then consolidated upwards as the dust settled and market participants took comfort in the chairman's reiteration that further stimulus remains an option should economic growth slow further.
Analysts at Sucden Financial said that Mr Bernanke was once again very 'guarded' with his comments on US monetary policy and gave few clues as to future plans which disappointed the market and led to a sharp selloff in copper, unsettling the other LME metals. In very thin volume, market conditions were choppy and nervous. By the close, prices had recovered from the brief selloff earlier in the afternoon and 5pm closes were 'mixed.
Mr Bernanke was speaking from a central bank summit in Jackson Hole, Wyoming and acknowledged the painfully slow US labor market improvement among other signs of the US economic situation being far from satisfactory.
Mr Andrey Kryuchenkov analyst of VTB Capital said that "Once again Mr Bernanke said nothing new as he reiterated readiness to act but gave no timing or indications that a further round of quantitative easing was a done deal; if anything he mentioned that much will depend on future macro readings and that further easing was not warranted just yet. He also called on Europe to act as soon as possible with the Fed, well aware the ball is in the European Central Bank's court at the moment while the Federal Open Market Committee has time on its hands."
Mr David Wilson of Citigroup said that “Metals have been tracking the US dollar for direction recently, and as the greenback continues to see weakness against the euro, it has underpinned base metals prices by making them more appealing to other currency holders. Nevertheless, ultimately prices have refused to shift out of recent ranges.”
Mr Wilson said that "It raises the concern that the base metals will continue this sideways grind for the rest of the year. This may especially be the case if both China and the US do not issue further stimulus measures, while the euro zone continues to leave markets hesitant amid uncertainty.”
Source - AAP
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