India Base Metals: Up on Fed’s comments indicating more stimulus
Friday, Mar 27
By Rituparna Ghosh
NEW DELHI – Futures contracts of base metals on both the Multi Commodity Exchange of India and the London Metal Exchange rose today as investors shrugged off the record jump in US jobless claims and instead focused on US Federal Reserve Chairman Jerome Powell’s comments indicating more stimulus measures to tackle the spread of coronavirus, analysts said.
According to data released by the US Labor Department, a total of 3.28 mln people filed for unemployment in the week ended Mar 21, higher than 282,000 a week ago. The data is a key indicator of gauging an impending recession.
Powell assured markets that the US central bank would not run out of ammunition to protect its economy, even if the number of coronavirus cases reached the highest in the world.
Expectations of further stimulus measures also outweighed weak economic data from China. China’s National Bureau of Statistics showed a 38.3% plunge in industrial profits in the country for Jan-Feb from a year ago.
However, concerns over more weak economic data in the coming days limited the rise in prices.
“Coronavirus saw initial jobless claims in the US soar to an unprecedented 3.3 mln last week. This gives a foretaste of the poor economic data that will be published over the next few weeks and months. The US economy (and indeed the economies of many other countries) is currently grinding to a halt, in other words,” Commerzbank AG said in a note.
“However, we do not believe that they will be able to resist the pressure of weak economic data for any length of time, and envisage (significantly) lower prices in the coming months,” the note added.
Supply disruption following lockdowns in many countries to contain the spread of COVID-19, also supported metal prices.
Mining operations in South Africa have been suspended for three weeks and a two-day lockdown has been imposed in key mining regions of the Democratic Republic of the Congo. Several major copper miners in Chile and Peru have also reduced operations.
At 1730 IST, on MCX, the March futures contract of:
–aluminium was at 134.2 rupees a kg, up 0.1%
–copper was at 375.4 rupees a kg, up 0.2%
–lead was at 131.5 rupees a kg, up 0.1%
–nickel was at 860.2 rupees a kg, up 0.3%
–zinc was at 144.8 rupees a kg, up 0.3%
On the MCX, the March copper contract is seen at 350-380 rupees per kg. The same-month nickel contract is seen at 840-880 rupees per kg in the evening session and the zinc contract at 130-150 rupees per kg. The March aluminium contract is seen at 120-140 rupees per kg in the evening session, traders said. End
US$1 = 74.86 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Nidhi Chugh
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