Last night HSBC’s figures for Chinese manufacturing dropped from 50.5 in the previous month to 49.6 – a whole percentage below its expected level. To miss its target is one thing but to miss by a percentage point and move into contraction is more than a little disappointing – not since July last year have HSBC’s figures shown contraction.
Early-hours trading saw a particularly weak-looking copper price. The spot market has been somewhat propped up by positive figures issued out around Europe; there has been support for the metal in European trading, with Spanish, German, French and EU manufacturing PMI figures all coming in better-than-expected (although French figures have just managed to slow the rate of contraction).
The next signpost for demand will be this afternoon’s US existing home sales figures, due to be posted at 3pm (London time). However, US demand for copper is not as large as that of the Chinese manufacturing community.
The $3.29 low from 9 January still looks to be a key level; and any fresh low created should be heeded as a warning sign for those long on the metal.