Forexpros – Copper futures traded at their lowest level since mid-December during European morning hours on Monday, as investors cut their exposure to growth-linked assets following Friday’s disappointing U.S. employment data, which added to fears over weakening global growth prospects.
On the Comex division of the New York Mercantile Exchange, copper futures for July delivery traded at USD3.264 a pound during European morning trade, tumbling 1.5%.
It earlier fell by as much as 2.3% to trade at USD3.238 a pound, the lowest since December 15, 2011.
Appetite for growth-linked assets weakened after the Department of Labor said Friday that the U.S. economy added just 69,000 jobs in May, the smallest increase in a year and far below expectations for a gain of 150,000.
The unemployment rate unexpectedly ticked up to 8.2% from 8.1%, the first increase in 11 months.
The number of new jobs created in April was slashed to 77,000 from an original estimate of 115,000, while job growth in March was revised down to 143,000 from a previously reported 154,000.
Meanwhile, downbeat manufacturing data from China and Europe hurt prospects for global oil demand, further weighing on energy prices.
HSBC’s China Purchasing Managers’ Index released Friday slipped to 48.4 in May versus April’s 49.3, a sign that the world’s second largest economy may be cooling.
A deeper slowdown in China, the world’s second biggest economy, would impair a global expansion that is already faltering because of the implementation of harsh austerity measures in Europe.
The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year. Fears over a slowdown in copper demand from the country have been weighing on prices lately.
Manufacturing activity in the euro zone also shrank at the fastest pace in three years to 45.1 in May from 45.9 in April, according to the Markit purchasing managers’ index.
Ongoing concerns surrounding Spain’s deteriorating financial situation as well as fears over a potential Greek exit from the euro zone also weighed.
Europe as a region is second in global demand for the industrial metal. Prices have tracked investor sentiment toward the euro zone’s debt crisis in recent months.
Copper prices have been on a rapid decline since the start of May, amid growing fears over an escalating debt crisis in the euro zone and a deeper-than-expected slowdown in China.
Comex copper prices lost nearly 12.5% in May, the biggest drop since December 2008. Prices are more than 29% below last year’s record high of USD4.648 a pound.
Copper is sensitive to the global economic growth outlook because of its widespread uses across industries.
Elsewhere on the Comex, gold for August delivery was down 0.25% to trade at USD1,618.15 a troy ounce, while silver for July delivery shed 0.75% to trade at USD28.29 a troy ounce.
Forexpros
