Nickel, copper gain, as Chinese equity market performs better
Nickel and copper are among the precious metals that benefited from Chinese equity market gains, which calmed concerns over financial turmoil in the world's second largest economy. Nickel suffered two weeks of losses before rebounding along with other industrial metals in London.
Bloomberg News reported that nickel increased by 2.3 percent to $8,590 per metric ton Monday morning on the London Metal Exchange. Meanwhile, copper went up 1.1 percent to $4,378 a ton. Lead and zinc are other precious metals that gained, while aluminium and tin dropped.
Mineweb wrote that London's Amalgamated Metal Trading head of Asia & Pacific Richard Fu said, "The higher Chinese stock market and the sharp appreciation of the Chinese currency against the US dollar brought a little bit of good mood into the bearish metals market." China is in fact the world's biggest consumer of commodities. However, last week's returns on commodities dropped to its lowest since 25 years, as Goldman Sachs Group said on January 15 that production cuts are needed.
Meanwhile, according to Economy Watch, equity markets may have ended on a sour note last week. However, it is the people's Bank of China (PBOC) fix and the country's equity market performance that will greatly influence global market for this week.
China's stocks went up as more cities are starting to experience the recovery in home prices. There were also growing speculations that equities were oversold as the benchmark index went into bear market last week. The offshore trade of the yuan gained the most as China doubled its efforts to minimize bearish investments on the exchange rate.
Avatrade chief market analyst Naeem Aslam said, "The persistent downward trend for industrial base metal is still in play and the downward skew is very much dependent on the stagnant growth in China."
Commerzbank and Avatrade projected that metal traders would focus on China's gross domestic product, which will be reported Tuesday this week. Most analysts expect China to report a slow annual growth of only 6.9 percent. This is the slowest pace of growth for the country since 1990.