Copper crumbles over debt ceiling

The price of copper is 1.8% weaker as traders worry about future demand with the debt-ceiling deadline approaching.

Dealers are still apprehensive about the warring Democrats and Republicans being unable to come to an agreement over the debt ceiling, and this is casting doubts over the nation’s demand for copper.

Two years ago the US government decided to increase the debt ceiling which resulted in the US being stripped of its triple A rating. It is possible that both parties will come to an agreement and we will not have a repeat of 2011, but fear is getting the better of investors.

Over the weekend the HSBC China composite PMI came in at 51.2 for September, which compares with 51.8 in August. The report measures both manufacturing and services in China. Though any reading above 50.0 indicates an expansion, dealers are worried that China’s booming days are over.

High grade copper chart

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.