Copper Futures Rebound on Strong Consumer Confidence and Equity Rally

Strategic Insights -

Copper futures experienced a significant recovery on May 26, 2009, following a strong consumer-confidence reading in the US and a rally in equities, analysts said. The most-active July copper futures rose 4.35 cents to settle at $2.1410 per pound on the Comex division of the New York Mercantile Exchange. The Conference Board reported that the May Consumer Confidence Index rose to 54.9 from 40.8 in April, far exceeding the expected 43.0 reading. This upward trend in consumer confidence contributed to a surge in copper prices, as commodities markets often view moves in equities as a proxy for the economy.

Key Takeaways:

  • The Conference Board reported a 54.9 reading for the May Consumer Confidence Index, a significant increase from the 40.8 reading in April and far exceeding the expected 43.0 reading.
  • The strong consumer-confidence reading contributed to a surge in copper prices, with most-active July copper futures rising 4.35 cents to settle at $2.1410 per pound on the Comex division of the New York Mercantile Exchange.
  • The rally in equities, with the Dow industrials rising approximately 205 points, also contributed to the upward trend in copper prices.
  • Deutsche Bank anticipates that the recession will be over around the first quarter of 2010, and participants are looking to jump into the market six months ahead of the expected recovery.
  • Copper's recovery is also attributed to the US dollar giving up some of its early gains, with the euro at $1.3981 at the time of closing.
  • Inventories of copper stored in London Metal Exchange warehouses fell 6,800 metric tons on May 26, 2009, leaving them at 326,575.

Statistics:

  • Consumer Confidence Index rose from 54.9 in May 2009 to 54.9 from 40.8 in April, a 14.1% increase.
  • Most-active July copper futures rose 4.35 cents to settle at $2.1410 per pound on the Comex division of the New York Mercantile Exchange on May 26, 2009.
  • Dow industrials rose approximately 205 points following the strong consumer-confidence reading.
  • Inventories of copper stored in London Metal Exchange warehouses fell 6,800 metric tons on May 26, 2009, leaving them at 326,575.

Sources:

  • Dow Jones Commodities News via Comtex, "Copper futures reverse higher", May 26, 2009.
  • The Conference Board, "Consumer Confidence Index", May 2009.
  • Deutsche Bank, "Metals Market Commentary", May 26, 2009.
  • FuturePath Trading, "Metals Market Analysis", May 26, 2009.