Shanghai copper down

Shanghai copper tumbled by its four percent daily limit on Wednesday, following losses in London in the wake of weak US economic data and downbeat chart readings. The most-active September copper contract on the Shanghai Futures Exchange dropped by 2,520 yuan or 4 percent from Tuesday's settlement price, to 60,420 yuan at 0600 GMT.
At the close, copper was at 60,440 yuan ($7,936). "Sentiment is generally weak. The LME charts don't look very encouraging and may have prompted some techincal traders in Shanghai to close out positions in the domestic market," Shen Haihua, deputy general manager of Maike Futures, said.
Commodities and equity markets were weighed down by lower-than-expected US consumer confidence and a larger-than-expected decline in new-home sales. "The housing data doesn't help the market. We think the Fed will keep rates unchanged and perhaps inflation expectations are a little lower, so I am not sure whether the Fed will be as hawkish."
The Federal Reserve meets this week and is widely expected to leave its benchmark federal funds rate on hold at 5.25 percent. But only a minority of analysts now expect a rate cut by year-end, a dramatic turnaround from earlier this year.
"The market is coming to terms with the possibility of a more aggressive bias from the Fed. The market doesn't like the prospect, but it is indicative of underlying growth or a recovery," an analyst, who requested anonymity, said.
"I think they will hold rates where they are to avoid the risk of driving the US economy into recession, but in the short term, speculative investors will pull in their riskier positions ahead of a possible rate rise."
Copper for delivery in three months on the London Metal Exchange was $120 lower at $7,240 at 0711 GMT after losing 1.6 percent on Tuesday. A wave of strikes at major producers in North and South America helped underpin prices, and could help lift prices once more, dealers said.
"Should the disruption persist, and potentially be added to by the likes of Collahuasi, then upward pressure will increase," Standard Bank, London, said in a note.
"In the meantime, however, the US housing market and wider macroeconomic concerns are dominating." Workers at the 450,000 tonne-per-year Collahuasi copper mine in northern Chile are expected to vote for a strike on Wednesday.