Wall Street Has Field Day, Base Metals Higher

http://www.goldapple.com.cn 7/22/2010

Wall Street had a field day as the Dow Jones industrial average rose 201 points, or 2 percent, to 10,322.30. That was the Dow's biggest advance since it rose 274 points on July 7.

Why?  Better than expected second quarter earnings from from Caterpillar Inc., UPS Inc. and other companies beat analysts' forecasts.  However, it was the improved outlooks and forecast by these two companies that warmed investors hearts - that kicked buyers into gear.  These two companies are often seen as bellweather US stocks.

That said, after hours Amazon.com Inc. issued an earnings report that fell short of expectations. Its stock fell almost 14 percent in after-hours trading. So tomorrow the US stockmarket could be lower again such is the volatility.  Amazon is increasingly viewed as a proxy for consumer spending in the US, a significant reading of economic growth.

Base metals up and up
Base metals today continued their upward journey on fresh buying emerge in base metals on expecting improving economic outlook. Particular in Copper and Nickel was buying evident.

Copper demolished the 200-day moving average to hit an intraday high of $7,050 per tonne this afternoon, up $200 or 2.9 percent, before closing official ring business at $7,010.

Copper inventories declined continuously for the 25th session on the LME warehouse and stood at 416525 tonnes. LME copper stocks have dropped about 24 percent from levels in mid-February, suggesting firm demand but prices are down around 10 percent this year with the global economic outlook still hazy.

According to International Copper Study Group, World refined copper consumption exceeded production by 67,000 tonnes between January and April this year, against a surplus of 74,000 tonnes in the same year-ago period.

Prices were given a further push by yet another bullish LME stocks report overnight, which saw falls across all of the primary base metals with the exception of zinc.

Copper stocks dropped a net 1,100 tonnes, the 25th consecutive session of declines, underpinning an improving fundamental outlook and suggesting that the seasonal summer stock build may not be seen this year.

Nickel was up $805 at $20,300 per tonne this afternoon, its highest in more than a month, before settling at $20,250, still $755 up on the day. Stocks fell a net 552 tonnes to 117,210 tonnes.

Aluminium struck a new high since May 28 at $2,061.75 before closing at $2,044/$2,055, up $36. Stocks declined after climbing during this ‘third Wednesday’ week, down 6,100 tonnes.

Zinc hit a new high since May 28 at $1,957.75 before settling at $1,948.50, a $33.50 rise. Having fallen sporadically over the past two months, inventories jumped by 1,950 tonnes to their highest since June 17, 2005.

Lead peaked at $1,945, its highest May 17, before finishing the day $75 higher at $1,940. Stocks fell a net 425 tonnes today.

Tin hit its most expensive since April 29 at $18,600 but closed at $18,550/18,575, $180 higher - stocks fell a net 150 tonnes to a new low since June 8, 2009.

Today, US unemployment claims and home sales data will be released which is important for base metals. Any negative numbers may dampen on prices. Moreover, investors are eyeing the crucial bank-stress results of the Euro zone banks which are expected to be released on Friday.

The ASX/SPI 200 is up 64 points pointing to a strong day on local markets.