KAZ and BHP are up following Chinese data

Monday, 15th July 2019 13:52 - by Rajan Dhall

The likes of Kaz Minerals and BHP are on the rise today after the stronger than expected quarter on quarter GDP and industrial production data from China overnight. 

Although the GDP reading was higher than expectations, GDP has hit a 27 year low as American tariffs are biting the worlds 2nd largest economy. 

China's economy grew at 6.3% year on year during the first-half of 2019, while its second-quarter GDP grew 6.2% year on year, both reflecting the slowest year-on-year growth since 1993. Industrial production rose to 6.3% in June from 5.0% in May, while fixed asset investment rose by 0.44% in June from May so its not all doom and gloom. 

The main news for the base metals industry came from China's crude steel output as it increased by 2% month on month in June and 10% year on year to another record high at 2.918 million mt/day This is all thanks to a strong property sector, which has been the biggest steel demand driver in 2019.

Below is the daily Comex copper futures chart (rolling month on month). As you can see it has bounced off the lows where the trendline extended from around 2019. Now the news of a rebound in industrial production is here it seems we may break the resistance trendline to the upside and test the mean value area at USD 2.76. This is were for the allotted time period on the chart most contracts changed hands also known as the value area. The cloud hanging over base metals is still the trade deal between the US and China so copper could still be a sell on rallies until the situation is resolved. 

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.