Informist, Thursday, May 4, 2023
By Sandeep Sinha
MUMBAI – Futures contracts of most base metals on the Multi Commodity Exchange of India and the London Metal Exchange rose today because of improved risk appetite and weakness in the dollar, which makes dollar-denominated commodities such as non-ferrous metals cheaper for holders of other currencies.
The dollar index, which measures the strength of the greenback against a basket of major currencies, was down 0.1% at 101.23 after the US Federal Reserve signalled that it may pause further rate hikes.
The US Federal Open Market Committee increased key interest rates by 25 basis points to 5.00-5.25% on Wednesday. Federal Reserve Chairman Jerome Powell hinted that policymakers may consider pausing further rate hikes.
Investors will take into account the 25 basis points hike in European Central Bank’s policy rate to 3.75% as inflation remained too high despite easing somewhat recently.
The upside in non-ferrous metals was, however, capped by weak economic data from top consumer China. The Caixin Manufacturing Purchasing Managers’ Index fell to 49.5 in April from 50 in March. A reading below 50 indicates contraction in activity.
ALUMINIUM prices fell as market players increased their short positions on the domestic bourse. However, the downside was restricted as stocks at LME-approved warehouses fell 1,900 tn.
COPPER prices gained from weakness in the dollar and the US Federal Reserve indicating a pause in rate hikes. However, the upside was restricted by a 475 tn rise in inventory at LME-accredited warehouses and the weak China data.
LEAD contracts rose as traders increased their long positions on the MCX.
ZINC contracts witnessed a technical rebound from oversold levels and value buying in the physical market.
* At 1710 IST, on the MCX, the May futures contract of:
–Aluminium was at 206.80 rupees a kg, down 0.6%
–Copper was at 740.10 rupees a kg, up 0.7%
–Lead was at 183.50 rupees a kg, up 0.1%
–Zinc was at 234.50 rupees a kg, up 0.2%
* Outlook for the evening session on the MCX:
–Aluminium contract seen at 204.0-209.50 rupees
–Copper seen at 732.0-746.0 rupees
–Lead seen at 182.50-184.50 rupees
–Zinc seen at 232.0–237.50 rupees
End
US$1 = 81.80 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Rajeev Pai
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