US copper futures bounced on either side of unchanged before eventually turning lower in early business Thursday, with the volatility due to swings in US equity prices, traders said. "We continue to be at the whim of what the stock market does," said one floor dealer down on the floor of the exchange.
"We're basically moving tick for tick with equities." Copper for December delivery was down 3.00 cents at $3.2330 a lb by 10:39 am EDT (1439 GMT) on the New York Mercantile Exchange's COMEX division, just off the bottom of its $3.2310 to $3.29 trading range. Volumes were estimated at 4,012 lots by 10:00 am With its tight correlation to the US stock market, copper prices see-sawed around the unchanged level as financial markets looked for direction following a slew of US economic data.
Prices initially received a boost after better-than-expected retail sales for August and smaller-than-expected readings of jobless benefits claims and unit labour costs, which alleviated concern that turmoil in the credit markets would send the economy into a recession.
But, the early gains were surrendered after a report showed steady growth in the US services sector and suggested the economy may not warrant a Federal Reserve interest rate cut. The Institute for Supply Management's services index was unchanged in August at 55.8 from July, above forecasts for a drop to 54.8. A number above 50 indicates growth.
Also, the Mortgage Bankers Association said on Thursday the rate of loans entering the foreclosure process was 0.65 percent on a seasonally adjusted basis, 7 basis points higher than the previous quarter and up 22 basis points from a year ago.
"There wasn't a big market reaction to the data. Markets are also looking at the delinquency and foreclosure data. Foreclosures and mortgage delinquencies rose in the second quarter. The delinquency rate in subprime mortgages also rose in the second quarter," said Richard Huber, economist with A.G. Edwards and Sons in St. Louis, Missouri.