Copper is trading at 310 cents per pound, up 1.4%, as the conference board leading index for China increased by 1.2% in March, compared with an increase of 0.9% in February. The leading index report gives a broad view of the economy by taking into account new loans, raw material supplies and housing. China is the largest importer of copper in the world so positive economic indicators from it will boost the metal.
Last night the HSBC Chinese manufacturing purchasing managers index came in at 48.3. This was an improvement on February’s reading of 48, but was slightly below expectations of 48.4. If China goes through a period of releasing weak economic data, it would not be uncommon for stimulus rumours to circulate.
As I mentioned previously, the Chinese yuan has lost ground to the US dollar, and some traders believe the Chinese central bank is behind this. If the rumours of a Chinese stimulus package persist, we could see copper hit the 100-day moving average of 316 cents per pound, with the 50-DMA of 304 cents per pound providing support.