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Although the HSBC flash manufacturing purchasing managers index figures for China were at 49.7, and reflecting contraction, they were considerably better than the 48.1 that had been expected. The last five months of data on China have shown contraction, and it had been hoped that Chinese government intervention would reverse this. Certainly, Asian equity markets had been giving this the benefit of the doubt.
The major driving force for copper continues to be demand from China, but European demand also plays a large part and this morning’s European figures will have negated some of the benefits from China.
France continues to be a worry for Europe as it stumbles along in an unconvincing recovery. However, it now appears the previously reliable German manufacturing demand has also been affected by the Ukraine issue that hangs over the market.
For its part, the US has failed to take up any of the slack highlighted by its worse-than-expected existing home sales that were posted this afternoon.
All of this points towards a less than convincing short-term future for copper. Although the share price is not high enough to turn aggressive on the selling, I would want to see much lower levels and an improving Asian demand before being tempted into buying.