Recession forecast from the European commission drags down base metals
Base metal that showed some resilience on the back of stable stock markets from late last week, came under pressure after the European Commission acknowledged today that the region's economy may have entered a recession this year.
By Devangi Joshi, ET Online |
MUMBAI: Base metal that showed some resilience on the back of stable stock markets from late last week, came under pressure after the European Commission acknowledged today that the region's economy may have entered a recession this year.
Base metal November futures on MCX declined by an average of 3.5 percent after trading higher in early trading hours today. Copper futures lead the declines by losing more than 6 percent from today's high of Rs 214.75 per kg towards Rs 200.
" While the stability in financial markets provides some short covering and bargain hunting rallies in base metals, the underlying trend is still bearish," said Harish Gallipeli, research head, Karvy Comtrade.
The commission said today that the economic growth in the euro area is expected to slump to 0.1 percent in 2009. It also said that region's GDP could shrink for three consecutive quarters this year and cut its forecast for full-year 2008 growth to 1.2 percent from 1.3 percent previously.
According to Harish, by day, it is becoming evident that the US and European economies are headed for a recession. " Now the fear is how much of this slow down will affect emerging economies like China and India which have failed to withstand the tremors in global markets as reflected by the recent economic releases from these countries." he added.
Prices are expected to remain under pressure today, also as traders await the release of US ISM (Institute of Supply Management) manufacturing index, a gauge of manufacturing activities in the world's largest economy. The index has been contracting from nearly two months now.
Base metal November futures on MCX declined by an average of 3.5 percent after trading higher in early trading hours today. Copper futures lead the declines by losing more than 6 percent from today's high of Rs 214.75 per kg towards Rs 200.
" While the stability in financial markets provides some short covering and bargain hunting rallies in base metals, the underlying trend is still bearish," said Harish Gallipeli, research head, Karvy Comtrade.
The commission said today that the economic growth in the euro area is expected to slump to 0.1 percent in 2009. It also said that region's GDP could shrink for three consecutive quarters this year and cut its forecast for full-year 2008 growth to 1.2 percent from 1.3 percent previously.
According to Harish, by day, it is becoming evident that the US and European economies are headed for a recession. " Now the fear is how much of this slow down will affect emerging economies like China and India which have failed to withstand the tremors in global markets as reflected by the recent economic releases from these countries." he added.
Prices are expected to remain under pressure today, also as traders await the release of US ISM (Institute of Supply Management) manufacturing index, a gauge of manufacturing activities in the world's largest economy. The index has been contracting from nearly two months now.
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